Mr Forrest's private investment group Tattarang is proposing to redevelop an existing caravan park north of Exmouth at Padjari Manu, or Vlamingh Head.
It will provide a range of accommodation options including eco-tents, hotel rooms, villas and caravan park sites for about 550 guests.
Tattarang has been working towards approval for the project on the world heritage-listed Ningaloo coast for more than two years.
WA's Environmental Protection Authority on Tuesday recommended Environment Minister Reece Whitby approve the project subject to conditions including measures to mitigate impacts on turtle nesting.
Tattarang and its subsidiaries will be required to reduce light emissions from the site which could hamper the orientation of adult turtles and hatchlings.
The authority's chair Matthew Tonts said Tattarang would also be required to mitigate impacts on Aboriginal cultural heritage.
"The location of this redeveloped site is in a globally significant area abundant in turtles, subterranean fauna, dark and clear sky values and Aboriginal heritage and culture," Professor Tonts said.
"The EPA took into consideration that the beach adjacent to the resort is critical turtle nesting habitat and the fact that visitor capacity will not increase from the caravan park which has operated at this site for more than 30 years.
"To mitigate the impact on the turtle hatchings, the EPA supports the best-practice lighting designs of the proposal to reduce the light emissions from the site and that access to the beach would now be via formalised paths."
Tattarang, which did not wish to comment on the approval, has previously said the resort would be low-impact and "blend seamlessly" into the natural environment.
It said the resort would create hundreds of jobs across construction and operations and contribute millions of dollars to Exmouth's economy.
The authority said Tattarang had undertaken further consultation with traditional owners regarding the proposal's interaction with their spiritual and cultural wellbeing and potential impact on groundwater.
It has committed to avoiding a site considered significant to local traditional owners and will develop a cultural heritage management plan.
The report to the environment minister is open for public appeal until April 26.
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