Australia on Thursday approved a controversial project backed by India to build one of the world's biggest coal mines despite conservationists' fears it threatens the Great Barrier Reef and vulnerable species and may worsen global climate change.

The Queensland state project was approved subject to "36 of the strictest conditions in Australian history", Environment Minister Greg Hunt said.

It came two months after the federal court blocked the $12.1 billion Carmichael Mine, largely in relation to its effect on two vulnerable reptiles - the lizardlike yakka skink and the ornamental snake.