Agriculture Minister Terry Redman said more than a decade of trials in the Ord region showed that commercial GM cotton was viable, both economically and environmentally.
But he acknowledged broadacre plantings of the crop were not likely until more irrigation land was opened up in the region, given the bulk of existing land was being used for other crops.
"I'm not expecting that tomorrow there will be a whole heap of GM cotton grown," he said. "Clearly, the farming community and the business community will now have a choice."
The former Labor government imposed a blanket ban on all GM crop production in 2003. Mr Redman said he would sign an exemption order under the legislation to allow commercial GM cotton in the region.
GM traits, which includes resistance to insects by making the plant toxic to heliothis moths, meant the crop would operate under dramatically different techniques than those used in the region's previous disastrous experience with non-GM cotton. During its final year in the mid-70s, growers were spraying pesticides up to 40 times each season, including with the now banned DDT.
"In comparison, our GM cotton trials have only required two spray applications with insecticides that are far more environmentally friendly," Mr Redman said.
He said 90 per cent of cotton grown in Australia was genetically modified, with the Ord trials often producing 10 per cent better yields than other parts of the country.
``These trials have shown that there are no agronomic problems, including the control of insects, in growing GM cotton in the Ord.
``Importantly, there have been no environmental concerns with the crops.''
The trials were conducted under the supervision of the Office of the Gene Technology Regulator, the WA Department of Agriculture and Food, and the Commonwealth Scientific and Industrial Research Organisation (CSIRO).
But environmentalists have criticised the decision, saying they want a guarantee that GM cotton will not end up in food.
Conservation Council director Piers Verstegen says people are being tricked into thinking that cotton is just a fibre crop.
"It's actually the case that cotton seed is actually a food product that is turned into vegetable oil that is sold on supermarket shelves," he said.
``Once GM crops are introduced there is no going back. We will lose our reputation as a clean, green state for agricultural production,'' Verstegen said.
He also charged that the government had succumbed to pressure from the GM industry, despite community concerns.
Verstegen recalled that Agriculture minister Redman had previously told an anti-GM rally at state parliament that he would listen to community views before a decision on the issue was made.
``He has not honoured that commitment and today's announcement demonstrates that this government is open for business with the GM industry but quite happy to ignore the legitimate concerns of the WA community,'' Verstegen said.
But the government responds by citing a 2007 report into GM crops that estimated GM cotton would be worth more than $50 million a year to the region and would generate 200 full-time jobs.
Opening up the Ord to GM cotton could relieve stress on the Murray-Darling system, Agriculture minister Redman said.
``Cotton growers facing severe water shortages in the eastern states will also have an alternative site that is well supplied with water all year round, and we may see some of their operations move to the Ord, providing relief to the Murray-Darling system,'' he said.
But Verstegen said GM cotton had not performed well in other countries and pesticide use had not been substantially reduced.
``Cotton is a crop that is extremely intensive in chemical and water use and the experience with GM cotton in other countries has shown that the use of pesticides is not reduced substantially as claimed,'' Verstegen noted.
The WA government is also reconsidering a moratorium on GM canola and assessing risk management issues surrounding the oilseed crop in GM form.
Both the WA Farmers Federation and the Pastoralists and Graziers Association (PGA) of WA welcomed the announcement.
WAFarmers chief executive officer Andy McMillan said the minister had focused on scientific evidence rather than emotional campaigns in his decision making.
PGA grains spokesman Leon Bradley said the lifting of a ban on GM cotton signalled the end of a technology dark age for WA agriculture.
``We are hoping this trial is a signal for not only for Kimberley producers to proceed to harvest the substantial benefits of GM cotton but also for grain producers in the agricultural areas to be able to grow GM canola and other crops sooner than later,'' Mr Bradley said.