The decision closes one route to decarbonisation in Queensland, which aims to reduce its greenhouse gas emissions by 75% from 2005 levels by 2035 and achieve net zero by 2050.
The state had already this month blocked a plan by mining giant Glencore (GLEN.L), opens new tab to bury liquefied carbon dioxide captured from a coal-fired power plant in part of the aquifer.
"Today is a great day for Queensland, for the environment, for farmers, and for the Great Artesian Basin," state Premier Steven Miles said in a statement.
"I've listened to Queenslanders," he said. "I think the Great Artesian Basin's unique environmental, agricultural, economic and cultural significance is worth protecting."
The basin is a network of aquifers that covers most of eastern Australia, supporting agriculture and communities.
Greenhouse gas storage activities including carbon capture and storage and enhanced oil recovery using a greenhouse gas stream will be permanently prohibited in the basin, the state government said.
These activities may be possible in other parts of the state and the government would assemble an expert panel to assess the safety of doing so, it said.
When blocking the Glencore project, the state's environment ministry said the buried carbon dioxide could migrate, spreading contaminants including lead and arsenic and causing irreversible or long-term damage to groundwater.
Glencore blamed the decision, which followed a campaign by farmers, on misinformation and political opportunism. It said its proposal was safe, targeted an area deep underground with unused, low-quality groundwater and the carbon dioxide was extremely unlikely to spread far.
Queensland's edicts do not affect other regions that host the basin. Oil firm Santos (STO.AX), opens new tab is building a carbon capture and storage project in part of the basin in South Australia state.
