The Federal Government has axed plans to dump dredge spoils into the Great Barrier Reef World Heritage area off Gladstone in central Queensland.

Federal Environment Minister Greg Hunt has ordered the Queensland Government and the Gladstone Ports Corporation to consider only onshore dumping of dredge spoils from the construction of a proposed $400 million second sea lane.

He says the State Government and Port have agreed to use the 12 million cubic metres of spoils to reclaim further land in Gladstone Harbour.

The State Government says it supports the Commonwealth's ban.

Queensland's Environment Minister, Andrew Powell, says all other options will be explored.

The Gladstone Ports Corporation says it is unaware of the decision and has declined to comment until it speaks with the State Government.

Ports chief executive Craig Doyle says no environmental impact statement on the project has been conducted and it is yet to go out to public consultation.

Australian Marine Conservation Society spokeswoman Felicity Wishart says the Federal Government has made the right decision.

She says it should apply the same standards to other developments.

"The sediment will cloud the water and that can last for weeks," she said.

"The sediment will travel longer distances than previously thought. It can smother sea grasses, which is important food for turtles and dugongs.

"It can smother the corals, which are obviously crucial to the reef's health."

Concerns have been raised the sea lane decision could make it easier for the Commonwealth to approve the highly controversial Abbot Point coal terminal near Bowen under its new cumulative impact strategy for reef protection.

The proposal involves the dredging of about 3 million cubic metres of seabed and disposing of it within the Marine Park.

The World Heritage Committee and the Great Barrier Reef Marine Park Authority are amongst numerous groups concerned about its impact on the reef.