The government would hold a public vote on November 25 this year if the senate passes the plebiscite bill this week.
But the senate is widely expected to block the plebiscite, as it did in November last year, with Labor, the Greens and the key Nick Xenophon group all opposed.
Then, the government will proceed with a non-compulsory postal vote.
Australians would be mailed ballot papers from September 12, with a final result then expected by November 15.
In the event of a “yes” vote in either case, the government would allow a private member’s bill to legalise same-sex marriage to be introduced to the House in the final sitting fortnight of 2017.
“The postal vote... will give everybody their say. Everyone will get a say,” Prime Minister Malcolm Turnbull said.
The government has assured Australians living overseas they will be allowed to have their say.
"All Australians who are enrolled on the Commonwealth Electoral Roll will get the opportunity to express their view through the postal plebiscite process," Acting Special Minister of State Mathias Cormann told SBS World News.
"Where Australians overseas, who are on the Electoral Roll, have registered as an overseas voter and provided their overseas address, then the request for response will be sent directly to them."
Australia House in London took over 15 000 votes for the 2013 federal election, according to the Australian Electoral Commission.
The government estimates the postal plebiscite would cost around $122 million – roughly $50 million less than the estimated cost of the full, in-person plebiscite.
It would be conducted through the Australian Bureau of Statistics, finance minister Mathias Cormann said, assisted by officers from the Electoral Commission.
Labor has slammed the postal idea, with opposition leader Bill Shorten calling it a "colossal waste of time and money."
"There's a constitutional question over whether or not this postal opinion poll is even legitimate," Mr Shorten said.
"Why is it that the Liberal party spend all their agility and innovation on working out ways to delay marriage equality? I wish they'd put the same effort into electricity prices, I wish they'd put the same effort into sorting the banks out."