About 30,000 landowners living in seven sites claimed they were affected by toxic PFAS chemicals found in the foam.
The Federal Court on Friday approved the $132.7 million sum after the parties reached an in-principle, binding agreement in May.
Sites near Royal Australian Air Force bases at Richmond and Wagga Wagga in NSW, Bullsbrook in Western Australia, Darwin in the Northern Territory, Edinburgh in South Australia, Townsville in Queensland and Wodonga in Victoria are covered under the agreement.
The so-called "forever chemicals", which accumulate in the body and do not naturally degrade, are linked to cancers, birth defects and diseases.
The suit alleged the Commonwealth did not adequately prevent the toxic chemicals in the foam from escaping and contaminating soil and groundwater.
Handing down his decision, Justice Michael Lee said the settlement amount was fair and in the interest of group members.
The government has not admitted liability in the terms of the settlement.
Payout sizes for each affected owner will not be divided equally and individuals will be assessed based on a range of factors including the type of property they owned and the particular community they lived in.
The investigation into PFAS-impacted communities revealed the widespread and damaging impact toxic substance is to properties and the environment, Shine Lawyers' Craig Allsopp said.
The joint head of class actions reminded people that claims for personal injury for all PFAS affected communities can still be brought.
"This does not have to be the end of the battle for compensation and acknowledgement," Mr Allsop said.
The Department of Defence previously agreed to pay landholders in Katherine (NT), Oakey (Queensland) and Williamtown (NSW) in a 2020 settlement worth $212.5 million.
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