The Queensland government has approved a multi-billion dollar Curtis Island LNG (liquefied natural gas) project near Gladstone.

Under the conditions of the new project, the coal seam gas will be taken from the Surat Basin, pump it to Gladstone for liquefaction and sell it to the Asian market.

QGC Pty Limited disclosed it has plans to build an LNG liquefaction site and export site at North China Bay on Curtis island. The facility would likely generate at least 8.5 million tonnes of LNG per year.

Coordinator general Colin Jensen has reviewed the project's proposal and environmental impact statement and gave its approval with conditions included.

"My conditions are clear and will not allow salt from coal seam gas water to leach into the environment," he said.

Premier Anna Bligh said the conditions include providing affordable housing for Gladstone and the Western Downs to help with the influx of thousands of workers.

"The Queensland Curtis LNG project could create up to 8000 jobs," she said.

Housing projects would help generate 250 homes in Gladstone region while another 280 houses may be built in the Western Downs.

Ms. Bligh added that extra homes would be needed to temporarily accommodate workers in the Curtis Island.

She hoped that the housing projects would not put low income earners at a disadvantage situation by imposing rent rises and house price increases.

The Premier added that consultations with the community will be provided to address concerns and disagreements of the project.

Once final approval is granted, the project may commence in 2014.