SABMiller and Foster's last week agreed on a sweetened A$9.9bn takeover deal.
"The proposed acquisition is not likely to result in a substantial lessening of competition for the supply of beer," said Rod Sims, Chairman of the Australian Competition and Consumer Commission (ACCC).
The ACCC backing comes after the Foster's board agreed to accept SABMiller's raised offer of A$5.10 plus a capital return and dividend last week, after a three-month battle by SABMiller to win over management at the Australian brewer.
Key shareholders also backed the improved deal, with only an outside chance of a rival offer now posing a threat.
Foster's Chairman David Crawford wrote to shareholders on Tuesday, saying the "significantly improved offer from SABMiller is a compelling proposal and represent the value inherent in this iconic Australian company."
The bid for Foster's comes after it lost market share and underwent a management shake-up.