Crucial documents that could further expose prosecution errors leading to the release of Sydney siege gunman Man Monis on bail will not be examined by the inquest into the tragedy.

The NSW coroner declared that, until legal professional privilege laws are changed, "there's nothing I can do".

Coroner Michael Barnes on Thursday largely rejected an application by the siege victims' families to have the documents included, upholding an argument by prosecutors that they are covered by professional legal privilege.

"I recognise that this may cause difficulties for the inquest and the parties in ascertaining why the bail application was dealt with in this way," Mr Barnes said.

"While that may seem unfair ... it is simply the effect of the law in relation to legal professional privilege.

"[Without] statutory intervention, there's nothing I can do about that."

Counsel for the families of Tori Johnson and Katrina Dawson, who died in the siege, said the NSW Director of Public Prosecutions had tried to "mask" the crucial documents revealing that one of its solicitors had made basic mistakes when Monis applied for bail in December 2013 after being charged as an accessory to murder.

The inquest heard that the solicitor, who cannot be named, failed to tell the magistrate that, at the time of the alleged offence, Monis had been on bail – a fact that had serious implications for his release.

The solicitor also mistakenly told the magistrate that there was neither a presumption in favour of, nor against, bail for the charge of accessory to murder when in fact Monis was required to demonstrate exceptional circumstances in order to be released.

These errors were not known to the inquest until the officer in charge of the case, Detective Senior Constable Melanie Staples, gave evidence that she had made both points in a letter to the solicitor a month before.

The solicitor omitted to mention this letter in his statement to the inquest, setting up a "clear factual conflict" between himself and Senior Constable Staples.

The letter was among a tranche of documents the DPP had managed to exclude from the inquest on the grounds that they were covered by professional legal privilege - the protections that apply to discussions between lawyer and their clients about legal proceedings.

On Thursday, counsel assisting the inquest, Jeremy Gormly, SC, and counsel for Mr Johnson and Ms Dawson mounted passionate arguments for the release of further documents going to what was known and when.

"These documents should be released so the witness [Senior Constable Staples] can have a fair and proper testing of the evidence without hands being tied behind our backs and a situation that doesn't disclose the true situation," Gabrielle Bashir, SC, for the family of Mr Johnson, said.

Mr Gormly said there was a "clear public benefit in all of these documents being exposed".

But counsel for the DPP, David Buchanan, SC, maintained his position that his client was entitled to legal privilege over the documents.

The coroner accepted the DPP argument in relation to four of the six key documents being sought.

He found that one document relating to the accessory to murder charge should be included.

The hearing continues.