Environment Minister Tony Burke was meant to make his decision on the project last week but held off because timber company Gunns said it was seeking tougher environmental controls.
"Today I have approved the remaining modules that are required for the environmental approval process for the pulp mill," he told reporters in Canberra.
Mr Burke said he had approved separate "modules" dealing with effluent trigger levels, land clearing and marine monitoring and response strategies that kick in if and when different conditions relating to the mill were not met.
Discharge of effluent was one of the most contentious issues with the mill.
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"It will now be a condition of the project as a whole that the discharge can only occur through what's known as elemental chlorine free light technology," Mr Burke said.
The technology is a form of bleaching.
"This is a much tougher environmental condition.
"It is one that has been demanded by environmental groups, it is something which Gunns have been saying they were willing to do, they will now have to do it as a condition of the development."
The company now will only be allowed to use plantation timber in the mill.
"No native forestry will be allowed to be legally used through this mill," Mr Burke said, adding that was a substantial variation on the original proposal.
"These two changes make the proposal a very different one to what was first presented to my department back in 2007."
The route of the discharge pipeline will no longer be above ground, instead it will be built underneath sand dunes on its way to the sea, Mr Burke said.
Changes sought by the company will have "less impact" on the environment.
Mr Burke imposed a new condition to replace a standard clause which would have allowed Gunns to come back at any time and seek variations to other conditions.
The minister said he was concerned to ensure there were no backward steps on environmental conditions.
"There will now be a condition ... that any variation will only be considered if it involves an equivalent or better environmental outcome," he said.
"Today we draw a line on the improved conditions that Gunns have sought on the improved environmental outcomes.
"From today there are no steps backwards."
