A New Zealand-backed super trawler will be banned from fishing in Australian waters for at least two years under proposed changes to national environmental laws.
The Abel Tasman won't be able to fish while an expert panel gathers scientific evidence about the impact of such a large-scale operation on the marine environment.
The moves comes despite the Australian Fisheries Management Authority (AFMA) stating it had found "no evidence" that larger boats posed a higher risk.
New Zealand fishing family siblings Peter and Donna Simunovich are major shareholders of Seafish Tasmania which is the joint venture partner operating the trawler.
Federal Environment Minister Tony Burke on Tuesday said the new laws would allow him and Fisheries Minister Joe Ludwig to agree there was uncertainty about the impact of a particular fishing activity and "declare" it.
The expert panel would then be given two years to conduct its scientific work.
"This creates a situation where we are not flying blind," Mr Burke told reporters in Canberra.
Under the existing law the environment minister can only adopt a high level of precaution if he is sure an activity will have a detrimental impact.
The 142-metre Abel Tasman, previously known as the Margiris, has a factory and freezer on board.
But the AFMA notes its net "is not at all the biggest net in the current Australian fishing fleet".
The authority has also stated that "midwater trawling is one of the most selective, which means the by-catch will be very low".
Mr Burke said the ability of the Abel Tasman to stay in the same location for an extended period of time meant there was a risk of "a localised major by-catch issue".
Dolphins, seals, sea lions and sea birds were all in the firing line.
The Abel Tasman hasn't been assigned a fishing quota but the operators have invested heavily in bringing the boat to Australia and complying with the law as it stands.
The question of compensation would be a matter for the courts, Mr Burke said.
The federal opposition has suggested the decision may put future investment in Australia's fisheries at risk, while Greenpeace described the decision as a victory for the community.