The Hornsea Project Two offshore windfarm will create nearly 2,000 construction jobs and 580 operational and maintenance jobs.
If built to the full capacity, the investment would total around £6bn providing a great opportunity for economic growth in the Humber region and beyond.
When complete, it will power around 1.8m UK homes.
Business and Energy Secretary Greg Clark said: “The UK’s offshore wind industry has grown at an extraordinary rate over the last few years, and is a fundamental part of our plans to build a clean, affordable, secure energy system.”
Located 90km off the Yorkshire coast, the windfarm will comprise up to 300 wind turbines and will connect to the grid at North Killingholme in North Lincolnshire.
DONG Energy’s SMartWind is behind the huge project.
Brent Cheshire, DONG Energy’s UK country chairman, said: “Development consent for Hornsea Project Two is very welcome. We have already invested £6bn in the UK, and Hornsea Project Two provides us with another exciting development opportunity in offshore wind.”