The "Star of the South" proposal off Gippsland covers a 574-square kilometre area between 10 and 25km off southeast Australia in the Bass Strait.
It could generate 8TWh of electricity a year, the Victorian state government said, corresponding to approximately 18% of total demand.
Developer Offshore Energy has been working with the federal and state governments to create a formal proposal and feasibility assessment.
"It's anticipated the project will have a feasibility phase of at least three years and if progressed would connect to existing infrastructure in the Latrobe Valley via undersea and underground transmission cables," the Victorian state government said.
If the plans go ahead then it is expected the project could start operating in time to contribute to the state government's target of sourcing 40% of its electricity from renewables by 2025.
"A new renewable power generator of this size would drive down electricity prices, and we'll support offshore energy wherever we can to progress this study."
"Offshore wind would add to Victoria's system capacity and security as Australia transitions to a more diverse energy mix,' said state minister for energy, environment and climate change, Lily D'Ambrosio.
By moving in to offshore wind, Australia will be able to put power generation closer to load centres such as Victoria state capital Melbourne.