The zone was set to stretch along the NSW Illawarra coast, with Climate Change and Energy Minister Chris Bowen expected to confirm plans for the project on Saturday morning.
It would be able to deliver enough power for 1.8 million homes or up to 2.9 gigawatts - a reduction from an initially planned 4.2 gigawatts, media reported.
It would also be 20km offshore rather than an originally proposed 10km.
The longtime pitch for an offshore wind farm zone along the Illawarra coast has stirred debate, with thousands of local residents attending a rally against the proposal at Flagstaff Point in October.
However, many welcomed the development on Saturday.
Thousands of residents rallied at Flagstaff Point in October to oppose the offshore wind farm plan. (Dean Lewins/AAP PHOTOS)
Climate Council policy and advocacy head Jennifer Rayner said the Illawarra - long a manufacturing powerhouse - would continue to thrive for generations with affordable and clean energy being produced in the region.
"Offshore wind will be an important part of Australia's clean energy grid because it provides reliable, steady renewable energy right around the clock," Dr Rayner said.
"This is one of the important ways we'll power Australia as our ageing and unreliable coal-fired generators close.
"The federal and state governments need to work together to rapidly break through roadblocks that are holding back the delivery of onshore wind projects already supported by communities and investors."
University of Wollongong Energy Futures Network director Ty Christopher hailed the offshore wind project as a positive step for the region.
"By working together as a community, sharing our concerns for the environment to co-design a clean energy future for the region, we have the ability to deliver positive outcomes for our oceans, our communities and our local economy," he said.
Mr Bowen was expected to hold a press conference in Wollongong at 11am on Saturday.
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