The development includes three wind farms and up to 332 turbines and will be 64 miles off Hornsea.
Energy Secretary Ed Davey said the Hornsea Project One scheme would create 2,500 local jobs and bring millions of pounds into the UK economy.
It is expected to be start operating by the year 2020.
The project is a joint venture between Mainstream Renewable Power, Siemens Project Ventures GmBH and Dong Energy.
Consent for the scheme has been given on the condition that it has an employment and skills plan approved by North Lincolnshire Council, including local advertising of jobs and supply chain opportunities.
Friends of the Earth campaigner Simon Bowens said it was "fantastic news for the blossoming offshore wind industry on the North Sea coast".
"The UK could be an offshore wind powerhouse, but the Government must show much greater ambition if we are to reap the full benefits and continue to drive down costs in the years ahead."
Plans for a huge offshore wind farm project off the East Yorkshire coast has been given the green light by the government.