Environment Minister Tanya Plibersek said SunCable's flagship Australia-Asia power link project would help meet growing demand for renewable energy at home and abroad.
A final investment decision is expected in 2027 with electricity supply to begin in the early 2030s, according to SunCable.
The approval comes with strict conditions to protect nature and the project must avoid the habitat of greater bilby, which are small rabbit-like marsupials with long floppy ears, Plibersek said.
Over two stages of development, the project aims to deliver up to 6 gigawatts of green electricity to large-scale industrial customers in Darwin, the capital city of Australia's Northern Territory, and in Singapore.
The approval comes as the centre-left government ramps up renewable energy projects even as the opposition coalition proposes building nuclear plants to replace coal-fired power by 2050, in a country where nuclear power is currently banned.
SunCable, owned by billionaire Mike Cannon-Brookes, said the approval was "a vote of confidence" in the project.
Cannon-Brookes, the co-founder of tech firm Atlassian (TEAM.O), opens new tab turned environmental activist, last year said the project was viable and that outside investors would be drawn to the project.
