Co-developers Australian Offshore Energy and Copenhagen Infrastructure Partners will now be allowed to assess wind resources and seabed conditions at a site eight kilometres off the Victoria coast.
The Australian environment department said the developers would now be able to determine whether the planned up-to 2GW Star of the South project, which was first proposed in 2012, is technically feasible.
Last month, the Maritime Union of Australia accused the government of dragging its heels on granting the licence due to an "ideological hatred of renewable energy".
Announcing the grant of the exploration licence, the environment department said: "As this offshore wind farm exploration is an Australian-first, the government has carefully considered this proposal."
Star of the South would consist of 250 turbines installed in a 574km2 area off the Gippsland coast in Victoria, south-east Australia.
