Australia is considering reusing waste dredged from the Great Barrier Reef for land reclamation instead of controversially dumping it at the World Heritage site, but conservationists Tuesday said it was not the solution.

The marine dumping proposal was approved by the Australian government in January as part of a major coal port expansion at Abbot Point on the Great Barrier Reef coast in Queensland state.

The decision sparked uproar and Queensland authorities late Monday said they would submit a "landmark proposal" to the federal government to use the dredge spoil to further develop Abbot Point instead.

Queensland Premier Campbell Newman said the move created a "win-win situation" while his Infrastructure Minister Jeff Seeney said it showed the government was "serious about protecting the Great Barrier Reef" and growing the economy.

Federal Environment Minister Greg Hunt welcomed the announcement and said he was committed to the long-term protection of the biodiverse site.

"I have said many times that onshore relocation is my preference and I have encouraged the proponents to come forward with a workable option," Hunt added.

Conservationists claim dumping the waste in marine park waters would hasten the demise of the reef, with dredging smothering corals and seagrasses and exposing them to poisons and elevated levels of nutrients.

Activist group Greenpeace said any port expansion -- which is linked to the approval of a huge India-backed mine in July that would see coal shipped through Abbot Point -- would be damaging for the reef and land reclamation was not the answer.

"This is not a band aid for reef dredging but salt in the wound," said Greenpeace spokesman Adam Walters.

"The very idea that Queensland taxpayers should fund destruction of the Great Barrier Reef World Heritage Area by buying dredge waste to build an even larger port at Abbot Point is insulting.

"The Queensland government must explain how a bigger port, damaging dredge plumes, seagrass destruction, increased shipping and coal driven climate change is in the interests of the reef," he added.

Greens party environment spokesman Larissa Waters said opposition to the marine dumping plan, including from UNESCO which has threatened to put the reef on its World Heritage in danger list, led to the new proposal.

But she warned that land dumping needed to be safe.

"Although onshore disposal of the dredge spoil is preferable to dumping it in the reef, the onshore disposal must be environmentally safe and we will be looking closely at the details of the proposal and its environmental impacts as they emerge," she said.

UNESCO in June deferred listing the reef as in danger and gave Australia until February 1, 2015 to submit a report on what it was doing to protect the natural wonder.