Australia's Environment Minister Tony Burke says the move is the "next step" in ocean protection.
The network will be made up of five main zones in offshore waters surrounding every state and territory.
But the government will have to pay up to $US100 million in compensation to commercial fishers who will be locked out of some of the new marine parks.
"It's time for the world to turn a corner on protection of our oceans," Mr Burke said as he announced the plans on Thursday.
"Australia today is leading that next step."
See detailed maps of Australia's planned marine reserves.
The proposed network places limits on oil and gas exploration off Western Australia and extends reef protection in the Coral Sea.
"This is the largest network of marine reserves anywhere in the world," Mr Burke told the ABC's AM.
"What we've done is effectively create a national parks estate in the ocean.
"The areas where you've got some of the most substantial outcomes are areas like the south-west of WA, areas like the Perth Canyon, which is an area as large as the Grand Canyon that would have been protected years ago had it been on land."
Mr Burke says parts of the Limmen Marine Park off the Northern Territory coast will be included in the plan.
"Limmen is an extraordinary area of sea-grass meadows, an important home to dugong, sea turtles, and an area worthy of the protection that it gets."
He says the "jewel in the crown" is in the Coral Sea off Queensland.
"People were saying we'd protected a lot of the Coral Sea in our proposal but people are asking us to really push the boundaries and cover some more reefs," he said.
"Well, in the final government position that comes out later today we've added Marion Reef, Bougainville Reef, Vema Reef, Shark Reef and Osprey Reef...one of the top dive sites in the world."
The plan falls short of demands by environmental groups who wanted all commercial fishing in the Coral Sea banned.
And oil and gas exploration will still be allowed close to some protected areas.
When the ABC revealed some of the details on Monday Senator Ron Boswell said the Opposition would fight the plans every step of the way.
But Mr Burke has dismissed the Opposition concerns.
"Ron Boswell, you know, he's opposed to any level of marine protection. He believes in fisheries management but he doesn't believe in establishing a national parks estate in the ocean. And at that point, it is just a fundamental difference of opinion," he said.
"There are some areas where the oil and gas industry is there quite close to some of the protected areas. Certainly wherever there is a marine national park established in those areas, there is a ban on oil and gas.
"Throughout the whole of the Coral Sea there is a ban on oil and gas and we've established a significant area around the Margaret River area where oil and gas will also be excluded."
The Australian Conservation Foundation's Chris Smyth says although the park declarations don't go as far as he'd like, he's still very happy with the announcement.
"There's a lot of stakeholders involved in this: the oil and gas industry, the commercial and recreational fishermen, environment groups and so on.
"Obviously some of the areas we would have liked to have got are still being opened to oil and gas interests and commercial interests, but across the board we think it's a major achievement in terms of oceans conservation.
A final consultation process is to be completed before the initiative goes ahead.
Recreational fishing fallout
Recreational fishers believe the government's plans are all about winning green votes in the cities, and they say it is absurd to protect areas where fish are thriving.
Sunfish Queensland - which represents 35,000 mostly recreational fishers - says the move is a step too far.
"What it does do is it takes away the validity of the true value of a green zone, which is there to protect things that are under threat," the organisation's Judy Lynne said.
"[It will be] a huge tourism loss to Queensland. There are a few iconic places where people like to go and fish in Australia, out off the Kimberleys, up in the Gulf and in the Coral Sea.
"That's now taken away from generations to come, when we have been shown to have no impact."
Ms Lynne also said Australia's border security could be compromised if fishers are excluded from areas like the Coral Sea.
But the Australian Conservation Foundation says the announcement is just the start of taking back Australia's waters for preservation.
"It's a historic conservation achievement. And we are going to be the leader, the global leader in oceans protection," Mr Smyth said.
"We understand the circumstances we find ourselves in in terms of the politics and the economics. But we just want to keep working with the government, with stakeholders and with the community to gradually improve the way we look after our oceans.