Same-sex marriage advocates had taken the government to court over the postal vote which they argued was both unnecessary and an illegal use of public funds.
But in decision Thursday, the High Court ruled the national survey could go ahead.
Ballot papers will be now be mailed out to households across Australia from September 12, beginning the two-month process.
The question will be, "Should the law be changed to allow same-sex couples to marry?"
Prime Minister Malcolm Turnbull announced the national vote on August 8, after another attempt to pass his preferred plebiscite failed in Australia's senate.
Unlike the plebiscite, the postal vote is voluntary and doesn't require legislation to go ahead.
In response to the announcement the survey would go ahead, opposition Labor leader Bill Shorten tweeted, "Alright, let's win this."
'Vote yes for love'
Within minutes of losing the vote, Anna Brown, director of the Human Rights Law Center legal advocacy group, was handing out leaflets encouraging a "yes" vote at Melbourne's Flagstaff station.
"All Australians deserve the same opportunity for love, commitment and happiness. All people in Australia should be able to marry the person they love," Brown told journalists outside the court.
"This plebiscite was completely and is completely unnecessary. LGBTI people didn't ask for this plebiscite but now the court has determined (it) will go ahead ... Vote yes for love."