Environmental offsets are used increasingly as a conservation tool to balance demands of development and environment but there is little evidence that offsets are effective. Our study assessed the effectiveness of the offset package developed for the Roe Highway Extension, in Western Australia, for Carnaby's black cockatoo, red-tailed black cockatoo and southern brown bandicoot. Black cockatoos were accounted for in the offset requirements, while Southern brown bandicoots were accounted for in the mitigation requirements of the approval but not the offset requirements. The development was cancelled after partial clearing and has not been completed. Pre-development consultant surveys were examined in relation to the offset requirements. Fieldwork was conducted at the offset sites to ground-truth habitat qualities where possible. The offset package was then compared to the principles of Australian Commonwealth and State offset policies. We found the offset package did not completely satisfy Commonwealth or State offset requirements, showed inconsistencies with the policies and produced net loss of environmental value. The offset sites provided 64% of the black cockatoo habitat required by the Commonwealth offset requirements, and were of a lower quality. Similarly, undergrowth vegetation (<1 m; used by southern brown bandicoots) varied between the development and offset sites, indicating the offset proposal approval criteria 'similar or better quality’ was not met. Like for like is not always required by offset legislation, but it was required in the approval criteria for this development project. The offset sites had previously been deemed unfit for development by the EPA, resulting in little additionality, a fundamental factor in ensuring true gains to compensate for the loss. To improve the suitability of offsets as a conservation tool we strongly encourage a checking process to confirm ecological outcomes of an offset, a contingency plan for if the offset doesn't provide sufficient ecological outcomes, greater consideration of requirements of species affected and stricter adherence to the wider principles of offsets. The use of biodiversity offsets is nearly inevitable given current development policies and processes; however, the application of offsets can be substantially improved to reduce further net loss of environmental value.