The federal environment minister has officially blocked mining magnate Clive Palmer's bid for a new Central Queensland coal mine.

Tanya Plibersek said she rejected the project because of the risks it posed to the Great Barrier Reef, freshwater creeks and groundwater. 

Last year, the newly installed minister made an initial decision to reject the project and sought public consultation. 

Her department received more than 9,000 public comments, with 98 per cent in favour of blocking the project. 

Ms Plibersek's decision is the first time in Australian history that a coal mine has been refused under national environmental laws. 

The planned mining site was just 10 kilometres from the edge of the Great Barrier Reef world heritage area near Rockhampton.

"I have decided not to approve the Central Queensland Coal Project because the risks to the Great Barrier Reef, freshwater creeks and groundwater are too great," Ms Plibersek said in a statement.

"Freshwater creeks run into the Great Barrier Reef and onto seagrass meadows that feed dugongs and provide breeding grounds for fish."

The project would have involved the construction of two open-cut pits to extract up to 10 million tonnes of coal each year.

It was expected to operate for twenty years, with the coal exported overseas for steel production.

Although it is the first time a federal environment minister has rejected an application to develop a coal mine, the Queensland government had also recommended the rejection.

Queensland Environment Minister Meaghan Scanlon said in a statement that Ms Plibersek's decision was in line with findings made by the state's independent regulator.

"The regulator and Independent Expert Scientific Committee found the project posed an unacceptable risk to the Great Barrier Reef," Ms Scanlon said.

"All projects are assessed on their merits and it is clear that this one doesn’t stack up."

Labor MP Nita Green, who is the federal government's special envoy for the Great Barrier Reef, said reports had found the project was unsuitable and rejecting the mine was in the best interests of the reef.

"They are under a lot of stress already from a water quality issues [standpoint], which we are working on, but I think the location of this mine was key and the community campaign that we saw," she said.

"It is a matter of a process that we have gone through methodically and remains to be seen if there is an appeal or anything like that."

'The penny's dropped', conservationists say

Opponents of the mine celebrated the decision, labelling it the "final nail in the coffin" for the project.

The move has been welcomed by the Capricorn Conservation Council, which has been lobbying against the mine for years.

President Paul Brambrick said the community was elated.

"[It's] something we've fought for a long time and that the community is actually right behind as well," Mr Brambrick said.

"Sometimes you wonder why you do this, but it makes sense in moments like this.