Federal Treasurer Scott Morrison has threatened court action to stop BHP Billiton heading offshore.
The company has been embroiled in a tussle with activist hedge fund Elliott Advisors, which wants to restructure BHP, including having a primary listing on the London Stock Exchange, a plan the miner has dismissed.
Elliott had previously said BHP would still be traded through CHESS Depository Interests or CDIs, a type of security which allows international companies to trade on the Australian Stock Exchange.
Mr Morrison said while the government welcomed foreign investment in Australia, it had to be consistent with the national interest.
"It is unthinkable that any Australian government could allow this original Big Australian to head offshore," Mr Morrison said in a statement on Thursday.
He said BHP Billiton Australian shares were held by hundreds of thousands of Australians directly, and by millions more through superannuation funds and other investments.
It also plays an important role in the Australian economy.
He said that in 2001, when BHP Ltd merged with Billiton plc, the treasurer Peter Costello set certain conditions to protect the national interest, including the joint company remaining listed on the ASX.
"These conditions apply indefinitely unless revoked or varied by me," Mr Morrison said.
"It is clear that the proposals under discussion would not be consistent with these conditions."
If breached, it would be a criminal offence and the company could be subject to civil penalties under the Foreign Acquisitions and Takeovers Act.
If convicted of an offence, the directors could be held personally liable.
"If an acquisition proceeds without my consent, I would be able to order a divestment of the assets acquired and take court action to enforce this order, the treasurer said.
Opposition Leader Bill Shorten said the loss of BHP would be a "disaster".
He doesn't want everything Australian sent overseas, and stands on the side of the thousands of people who work for the company and its shareholders and investors.
"We will work with the government to support them in protecting Australian jobs, Australian industry and an Australian head office which has been here since the formation of the country," Mr Shorten told reporters in Melbourne.
BHP Billiton shares were trading 0.3 per cent lower at $23.15 on the ASX in late trading.
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