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Melbourne-based company Wind Power will place the turbines on land leased from local farmers.
The 128 turbines will be able to generate 192 megawatts of power - enough to power the nearby city of Ballarat. This is almost 20% of the total 1000MW of renewable energy that Victoria aims to have in place by 2006.
Planning minister Rob Hulls said the wind farm would provide significant greenhouse benefits.
"The approval for the Waubra development brings the number of wind farms in Victoria to six, with Toora, Codrington and Challicum Hills operational, and construction underway at Wonthaggi and Portland," Hulls said.
But the project has already divided the Waubra community with opponents saying the huge structures will mar the landscape.
Hulls said of the 57 submissions received, 23 opposed to the proposal.
