The country's marine reserves will cover 3.1 million square kilometres or a third of Australian waters including the Coral Sea and the southwest coast of Western Australia.
They will limit fishing and some oil and gas exploration.
"This is the biggest step forward the globe has ever seen," Environment Minister Tony Burke told reporters in Sydney, adding Australia would be a world leader in ocean protection.
The minister will make a final decision on the plan following a 60-day consultation process, but warned the process would not involve shifting lines on maps.
Nationals leader Warren Truss said the plan to create 44 marine parks was aimed at giving Prime Minister Julia Gillard something to crow about at next week's United Nations environment summit in Brazil.
Mr Truss said the massive "no go zones" would shut out commercial and recreational fishers.
"When 'lock it up' is the government's approach to vast areas of Australia's territorial waters is it any wonder our supermarkets are overflowing with imported seafood?" he said.
The government proposes a $100 million compensation package for commercial fishing operators, with the details yet to come and funding provided on a case-by-case basis.
Ms Gillard said the marine plan would affect only about one per cent of current commercial fishing activity.
The Australian Marine Alliance, which represents commercial and recreational fishers, says 70 trawlers will go out of business.
"This is devastating and those that will suffer most will be coastal communities," chief executive Dean Logan said.
"Tony Burke's just single-handedly lost the election for the Gillard government."
West Australian resources minister Norman Moore condemned the plan as a "dog's breakfast" that would hurt the economy.
The proposal would severely curtail the state's oil and gas industry, he said, and impinge on current and future petroleum exploration and production.
"In addition, it will affect the $62.8 billion iron ore export industry due to restrictions on port and shipping access in the Kimberley and Pilbara regions," Mr Moore said.
Opposition Leader Tony Abbott said protecting the oceans was important, but he was against anything that damaged the rights of recreational fishers and the commercial fishing and tourism industries.
Australian Conservation Foundation boss Don Henry said the plan "was not perfect", but would give the government a good message to tell at the UN conference.
"We need to seriously look at how you have productivity in a way that's compatible with looking after the environment and people," he told AAP.
The Australian Greens say the government has caved in to the oil and gas industry by leaving off critically important areas.
"It's very clear that there have been significant holes created," leader Christine Milne told reporters in Melbourne.
Queensland Premier Campbell Newman wants to see the finer details of the plan before he responds.
It is expected that the final marine reserves will be declared before the end of 2012.