The first phase will cost about 746.7 billion won ($700 million), the ministry said. The entire development will cost around 2.3 trillion won and will be built over a period of nine years, the companies said in a statement in December.
A local spokesman for LOCZ Korea, the joint venture set up by Hong Kong-based Lippo and Caesars, declined immediate comment.
The South Korean government will also seek parliament's approval to ease the process of granting foreigner-only casino licenses to offshore investors, from requiring prior government approval to an open bidding process.
(Read more: Macau casino stocks set for 'watershed' year)
Although they have not formally said they will bid for a gaming license yet, Wynn, MGM and other major foreign firms that had previously expressed interest in building a casino in Incheon could try again when the process is eased, a government source with direct knowledge of the approval process told Reuters.
The source was not authorized to speak to media.
There are 16 foreigner-only casinos throughout South Korea, of which half are controlled by local firm Paradise and state-owned Grand Korea Leisure.
Chinese visitors accounted for about 60 percent of customers at Paradise's five casinos but contributed more than 80 percent of the revenue in 2013, a spokesman for Paradise said.
The 16 casinos saw total revenues of 1.25 trillion won in 2012, with the market growing an yearly average of 15 percent in the five years up to 2012, according to the latest public data by Paradise.
(Read more: Sun International affected by poor casino revenue)
Korea is not alone in the move to expand its gaming industry in Northeast Asia. Japan is moving toward legalising casinos, after a cross-party group of lawmakers submitted a bill to that effect earlier this year. Billionaire Sheldon Adelson, chief executive of Las Vegas Sands Corp, has already expressed interest.