According to The Australian Financial Review today, Treasurer Joe Hockey approved the deal on Thursday.
"The government welcomes foreign investment where it is not contrary to our national interest," Mr Hockey said. "Foreign investment has helped build Australia's economy and will continue to enhance the well-being of Australians by supporting economic growth and prosperity."
Japan Post now needs to secure approval from Toll's shareholders to complete the takeover. A shareholder meeting to vote on the offer will be held in May.
About one-third of Toll's shareholders are retail investors.
Toll chairman Ray Horsburgh said he expected a "successful and speedy" conclusion to the transaction.
Japan Post is owned by the Japanese government, which is planning to float the postal group within the next 12 months. The Japanese government has not specified exactly how much of Japan Post it plans to sell, but is considering retaining about one-third of the postal group's shares after it is floated.