The go ahead by the Labor Party Cabinet drew bouquets from business and brickbats from the green lobby, which said the Conservation Commission and the Environmental Protection Authority had clearly stated the project should not be built on the 24, 500 hectare island which is one of the country's most environmentally sensitive sites.

WA Premier Geoff Gallop said the approval was a win win win decision, saying the state, Australia and the global environment were all beneficiaries of the decision.

The business community welcomed the news, saying there would be almost 10,000 jobs created Australia wide with around 3000 workers needed for the construction phase.

The gas will be sourced from the Gorgon gas fields on the outer edge of the Carnarvon Basin with the CO2 being stripped from the gas and reinjected underneath Barrow Island. LNG will then be shipped from the island with a domestic gas pipeline connecting Barrow to the mainland.

The Chamber of Commerce and Industry dismissed environmental concerns and said the government was to be congratulated for its foresight and that it sent an important message abroad.

The decision also countered a perception that WA was turning against development, the CCI said.

Gorgon developer ChevronTexaco now faces the process of converting the in-principle Cabinet endorsement into Federal and State building and environmental approvals before construction can proceed.

This next stage of regulatory approvals is by no means guaranteed, with environmentalists signalling an uphill battle for ChevronTexaco. However the level of endorsement by the WA state government suggests that there is support at the highest levels for the LNG plant.

The Barrow Island Bill, aimed at excising the required 300ha needed for the plant from the A-class reserve, is due to be put before Parliament in the coming week.