Two environment groups took VicForests to the Supreme Court, arguing the agency is legally obliged to identify and conserve two endangered possum species when logging in state forests.

Kinglake Friends of the Forest and Environment East Gippsland contended greater gliders and yellow-bellied gliders needed better protection in Victoria's East Gippsland and Central Highlands forest management areas.

Justice Melinda Richards found VicForests logging has failed to adequately protect the two endangered species and presented a serious threat to the possums.

"There is a threat of serious and irreversible damage to greater gliders as a species, in that the species is at risk of extinction," she said on Friday.

"I am also satisfied that VicForests' timber harvesting operations in East Gippsland and the Central Highlands present a threat of serious or irreversible harm to the greater glider as a species.

"There is a lack of scientific certainty about the nature and extent of the threats to the species, including as to the effect of timber harvesting operations on the species."

VicForests' actions were inadequate and unlikely to be effective in conserving greater gliders detected within a coupe scheduled for timber harvest, she found.

Further, she found the agency's approach to logging fell well short of its requirements under the state's timber production code of practice.

"The ecological evidence was clear - greater gliders that live in coupes that are harvested in accordance with VicForests' current practices will probably die as a result of the harvesting operations," Justice Richards said.

VicForests was ordered not to conduct logging in East Gippsland or Central Highlands forests containing glider habitats, "unless it retains at least 60 per cent of the basal area of eucalypts in the harvested area of the coupe" including feed and hollow-bearing trees.

VicForests said the agency was disappointed by the court's decision.

"We are reviewing the decision and considering our options," the department told AAP.

In July, Federal Environment Minister Tanya Plibersek pushed greater gliders further up the list of concern from threatened to endangered species.

Australian Associated Press