Determination of petro-physical properties of coal bed methane (CBM) reservoirs is essential in evaluating a potential prospect for commercial exploitation. In particular, coal fracture permeability and relative permeability of coal to gas and water are the most significant rock properties controlling the transport of natural gas and water to the wellbore. In this work, absolute and relative permeability of different coal samples were determined experimentally under steady-state flowing conditions. Multiphase flow tests were conducted using brine, helium as the flowing phases under different magnitudes of confining and pore pressures. Results indicate that effective stress (Confining pressure - average pore pressure) has a significant effect on both absolute and relative permeability of coal. As a result, relative permeability characteristics of CBM systems were found to be insufficiently represented as sole functions of fluid saturation. In addition, laboratory measurements were used to conduct field scale simulations of primary recovery from CBM systems using variable, stress-dependent relative permeabilities.