A customised exploration license from the Environment department for the up-to 2GW Star of the South project would allow a detailed assessment of the wind resource at the proposed site off Victoria.
The department has also recommended the project to energy minister Angus Taylor, but he is yet to grant the exploration license.
Without the license, the project cannot progress further.
Star of the South, which is being developed by Australian Offshore Energy and Copenhagen Infrastructure Partners, was first proposed in 2012.
Since then, no regulatory framework governing offshore wind has been put in place, making development "complicated", Jo Evans, deputy secretary of the department’s climate change and energy innovation group admitted.
She added the next steps for Star of the South would be granting of the exploration license and then carrying out assessment of the wind resource.
Star of the South would consist of 250 turbines installed at a 574km2 area off the Gippsland coast in Victoria, south-east Australia.
The Victorian government had previously stated its support for the project, welcoming its contribution to the state’s climate targets.
But the revelations of the energy minister’s heel-dragging frustrated the Maritime Union of Australia (MUA), which claimed the project could create up to 12,000 manufacturing and construction jobs.
"We have a major wind project that would create thousands of jobs and provide clean, reliable energy for more than a million Australian households, but because of their ideological hatred of renewable energy, the Morrison government appears to be actively stalling its development," said MUA deputy national secretary, Will Tracey.
"Energy minister Angus Taylor has been briefed on the project and presented with recommendations, yet the exploration license continues to sit on his desk gathering dust.
"Rather than support renewable energy projects, under the Morrison government we can’t even get approval for a few wind measurement buoys off the Gippsland coast.
"Energy minister Angus Taylor must get off his hands and immediately allow the Star of the South wind project to move forward to the exploration stage," Tracey added.
Windpower Monthly has contacted the Australian energy ministry for further comment.
