Some sections of the reef have been bleached due to elevated sea temperatures and acidity, the results of global warming
UNESCO on Saturday urged decisive action from Australia to protect the Great Barrier Reef from a gas and mining boom, warning it risked being put on its list of world heritage sites deemed "in danger".
Australia is riding an unprecedented wave of resources investment due to booming demand from Asia, with projects worth Aus$450 billion (US$435 billion) in the pipeline.
The world's largest coral reef is not yet at sufficient risk to be declared in danger but UNESCO said the sheer number and scale of proposals including liquefied natural gas (LNG), tourism and mining projects could threaten it.
Declining water quality and climate change were the major issues and it was "essential to reduce development and other pressures as much as possible to enable an increase in the reef's resilience", UNESCO's World Heritage Committee said.
The committee said it would recommend the reef be put on the "in danger" list if some of the biggest projects went ahead, giving Australia eight months to chart a more sustainable course.
Australia's Environment Minister Tony Burke agreed that the reef was at a "crossroads" and Canberra was "acutely aware of the challenges facing the reef such as climate change and the impacts of coastal development."
"While these issues are complex, we are committed to addressing them through a range of approaches both on land and in the marine environment," Burke said.
Campbell Newman, premier of Queensland state which is locally responsible for the reef, was more combative, warning that "we are in the coal business".
"We will protect the environment but we are not going to see the economic future of Queensland shut down," Newman said.
Environmental groups said the report should be a wake-up call for the government, with the Australian Conservation Foundation (ACF) describing the potential danger listing as a "national disgrace."
ACF chief Don Henry said the mining boom was putting the reef at peril, with a near-miss involving a bulk carrier just two weeks ago and a Chinese coal carrier gouging a massive scar in the coral when it foundered back in 2010.
A UNESCO mission that toured the reef in March to assess the impact of an LNG project on Curtis Island said it had found an "unprecedented" development boom in the region with serious conservation risks.
"The outstanding universal value of the property is threatened and decisive action is required to secure its long-term conservation," the committee warned.
"The rapid increase of coastal developments, including ports infrastructure is of significant concern."
Gladstone Harbour -- a coal export hub with huge shipments to Japan, India, South Korea and China -- is undergoing a major expansion requiring dredging works which activists say is harming marine life.
UNESCO said environmental conditions stipulated by the government at Gladstone and Curtis Island, a mammoth LNG project targeting annual production of 12 million tonnes, were not tough enough to protect the reef.
It urged a "highly precautionary" approach banning any new port development in the reef zone until a conservation plan had been mapped.
Burke acknowledged that there were some "very significant" decisions to be made about the reef's future but noted that some the projects of most concern to UNESCO had been scaled back since their visit.