The nerve centre of the National Broadband Network (NBN) will be based in Melbourne, employing up to 425 people.
NBN Co, which is responsible for delivering the government's promise of internet access for everyone in the country, said the national operations and test facility would be based in Melbourne's Digital Harbour precinct at the Docklands.
Chief executive Mike Quigley said up to 425 people would be employed when the facility was fully operational early next year, but the flow-on employment benefits would be felt nationally.
Melbourne was chosen ahead of rival bids by Brisbane and Sydney.
The jobs coup is in addition to 290 staff that will be employed at NBN Co's office in Melbourne's CBD, housing the engineering and operations groups and associated staff.
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"This facility will be the centrepiece of our network and the key interface with our customers, the retail service providers, who will be using our network to provide high-speed services to their business and residential customers across Australia," Mr Quigley said.
But there's been disappointment in Sydney over the choice of Melbourne.
The New South Wales opposition says Sydney's failure is in keeping with the federal Labor government's poor relationship with the state.
Opposition leader Barry O'Farrell described it as another missed opportunity for Sydney that could have brought extra employment.
