The organisation said its research had developed a process through which it was possible to produce oil in the leaves and stems of plants as well as the seeds, both for food and next generation biofuels.
US-based company Amfora and CSIRO this week signed an agreement that will advance development and commercialisation of the technology to produce energy-rich feed for livestock.
CSIRO innovation leader Allan Green said it was the first of many applications of the technology, which could also be used for human food, biofuels and industrial uses.
"Previously it has only been possible to extract oil from the oil-rich seeds and fruits of some specialised plants, such as canola, soybean, sunflower, coconut and oil palm," Dr Green said.
"What we have been able to do is switch on this high-level oil production in vegetative tissue, such as in stems and leaves, as well."
In some plants, the research team has been able to get around 35% oil content into vegetative tissue; the same amount as in many oil seed crops.
"If the technology were applied to existing oil crops it could potentially treble oil productivity and greatly expand renewable oil production worldwide," Dr Green said.
"We are using solar energy captured by the plant to convert the leaf's starch reserves into more energy-dense oil molecules, which significantly increases the energy value of the vegetative tissue where the oil accumulates."
CSIRO CEO Larry Marshall said by 2037 the world would need 50% more plant-based oils just to meet the nutritional needs of a global population, and there was a growing demand for transport fuels emerging as well, as part of global efforts to reduce emissions.
"A transformational approach was needed to solve the increasing demand for plant oils within the limitations of our current agricultural footprint," Dr Marshall said.
"CSIRO's relationship with Amfora, under which CSIRO will become a significant shareholder, is an excellent demonstration of our Strategy 2020 in action.
"We are driving profound global impact from this breakthrough innovation, benefiting Australian farmers and securing a revenue stream back to Australia to support further research that will keep Australia at the leading edge of competition."
Amfora will use the technology to develop oil content in the vegetative tissue of corn and sorghum, meaning they can market a feed for dairy farmers that does not require them to purchase additional oils, such as tallow or cotton seed, to supplement feeds.
Future applications, such as the production of industrial oils and bio-based diesel, will require further industrial supply chain development to customise techniques for extracting the oil and converting it to suitable products.
The breakthrough comes as Europe moves to ban biofuels that are made from vegetable oils including palm oil by 2020, to prevent the EU's renewable transport targets from inadvertently contributing to deforestation.
The proposals could also be included in a palm oil assessment that the commission is expected to publish later this year.
The EU wants 10% of transport fuels from renewables by 2020.
Studies have found that overseas demand for palm oil, soy, beef, wood and other agricultural products are key drivers of illegal forest clearances in Indonesia, Malaysia and other countries.