Dong Energy is to build a 258MW wind farm off the North West coast of England.
The Danish power giant said it would construct the Burbo Bank Extension in Liverpool Bay.
It is expected to be commissioned in 2017.
Dong vice president Samuel Leupold said: “I am very pleased that with this final investment decision we can now begin the construction of Burbo Bank Extension, which will supply green power to approximately 180,000 UK households.
“The construction and operation of this wind farm will support green growth and employment in the UK.”
Energy secretary Ed Davey said the move showed government policy was working.
“The decision by Dong underlines the fact that we are providing certainty for investors, resulting in a steady stream of private funding for renewable electricity projects, and the creation of thousands of green jobs,” he said.
“We want an energy mix that is built on diverse, home-grown sources to make sure our supplies are clean and secure. Wind power is vital to this plan, with £14.5bn invested since 2010.”