A major Australian coal mine project near the Great Barrier Reef was controversially approved by the federal government Tuesday, days before national elections are expected to be called.

The controversial Queensland project backed by India's Adani would significantly boost coal production, but must now get approval from state and local governments.

The project faces fierce opposition and has split the conservative government, with some Queensland supporters in favour and others in urban areas voicing environmental concerns.

"This project has been subject to the most rigorous approval process of any mining project in Australia," Environment Minister Melissa Price said in a statement as she announced federal approval for the mine's groundwater plans.

The decision -- the final green light required from federal government -- means that after years of regulatory and legal delays, Adani has just state government approvals to obtain before construction can begin.

Adani Australia's chief executive for mining Lucas Dow welcomed Price's approval and said the project would "achieve sustainable environmental outcomes" and deliver thousands of jobs in the state.

The decision was criticised by environmental campaigners, who questioned why it was made just before the election date is announced.

Conservationists have argued the mine would not only contribute to global warming and threaten local vulnerable species, but means coal will have to be shipped from a port near the World Heritage-listed Barrier Reef.

"Coal-loving coalition MPs appear to have strong-armed the environment minister into granting Adani access to Queensland's precious groundwater on the eve of the election," the Australian Conservation Foundation's Christian Slattery said in a statement.

Slattery added that there were also concerns about the amount of groundwater the mine would use in its operations.

The union-backed opposition Labor Party, which appears poised to win the election, has also had to balance calls to support coal mining jobs in Queensland with its pro-environment inner-city supporters.

Labor leader Bill Shorten focused on internal government tensions over the mine in response to the decision, and did not say if he would overturn it if his party came into power.

Adani last year said it would scale back its plans and fund the multi-billion-dollar project itself.

The plan is to produce around 28 million tonnes of coal per year, half the amount initially projected, with most of the commodity expected to be sent directly to India.

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