The mining giant Adani's environmental authority has been set aside after the court found Environment Minister Greg Hunt had not properly considered advice about two threatened species - the yakka skink and the ornamental snake, The Sydney Morning Herald reported.
The decision has got warm welcome from environmentalists in Australia.
The court took the decision while hearing a plea filed by Mackay Conservation Group in the Federal Court in January, alleging that greenhouse gas emissions from the mine, vulnerable species and Adani's environmental track record had not been taken into account.
"The Minister conceded that he had made an error and Adani did as well that the proper process hadn't been followed in approving the Carmichael mine," Mackay Conservation Group coordinator Ellen Roberts said.
"He is required to take advice from his department on threatened species into account and he didn't do that.
"A lot of new information has emerged since Greg Hunt made his approval and we call on him to now reject the mine."
The project, which will produce up to 60 million tonnes of coal for export a year, has faced fierce environmental opposition because of the proximity of coal terminals at Abbot Point to the Great Barrier Reef.
Adani blamed the court's decision on an error by the environment department.
"It is regrettable that a technical legal error from the Federal Environment Department has exposed the approval to an adverse decision," Adani's spokesman said.
"It should be noted the approval did include appropriate conditions to manage the species protection of the yakka skink and ornamental snake.
There are growing calls for the federal and Queensland governments to put a stop to the development and investigate the approvals process for it after information that has been brought to light about Adani's environmental and corporate practices.