An Australian parliamentary committee has ruled that the country’s federal government does not have sole responsibility for marriage equality laws, paving the way for the state of New South Wales (NSW) to introduce its own same-sex marriage bill.

Barry O’Farrell, the NSW premier, has previously said that he would prefer to have the issue decided on a national level.

However, he said he was prepared for NSW to introduce its own bill if the committee found that it was possible to do so. He has promised his ministers a conscience vote.

If NSW legalises equal marriage it would be the first Australian state to do so.

Prime Minister Kevin Rudd announced after resuming office in June that he intends to hold a national referendum on same-sex marriage.

The parliamentary committee report, released on Friday, overrules arguments from marriage equality opponents and others that Australian states cannot individually legalise same-sex marriage.

Committee members warned, however, that state equal marriage laws could be challenged in the high court, putting the legality of same-sex marriage on a national stage.

A cross-party working group welcomed the decision as “a momentous step forward”. They also stated that the national interest in the committee’s findings demonstrated widespread support for equal marriage.

Mehreen Faruqi, a Green MP and member of the cross-party group, called on Mr O’Farrell to whip his MPs on the issue.

“Both the premier and opposition leader have publicly backed marriage equality; it is time they called on their parties to do the same,” she said. “It’s about removing discrimination from law. It’s not good enough to allow a conscience vote on the rights of others.

“The report recognises marriage between two people who love each other is a human right.”

Australian Marriage Equality director Rodney Croome said: “I hope to see same-sex couples marrying in at least one state or territory by the end of the year.”

Last year the Upper House of the NSW Parliament called on the federal government to allow gay couples to marry and to allow religious bodies to perform ceremonies if they choose.

However, openly gay MP Helen Westwood said she was “not convinced” equal marriage actually stood a chance of being legalised in the state.