The unidentified man, using a handheld metal detector, found the nugget on Wednesday, lying 60 centimetres underground near the town of Ballarat.

The value of the nugget has been estimated at more than 300,000 Australian dollars (USD 315,000), the 'Herald Sun' reported.

Ballarat Mining Exchange Gold Shop owner and dealer Cordell Kent said the prospector heard a faint noise on his detector and removed a dense pile of leaf mulch before he started digging.

He thought he had detected the bonnet of a car when he saw a glint of gold," Kent said.

"He cleaned the top of it and the gold kept expanding and expanding ... he saw more and more gold ... he couldn't believe what he was seeing," he said.

The nugget is worth actually about 282,000 Australian dollars in weight, but has an added premium because it is rare to find one over a kilogramme, Kent said.

"I have been a prospector and dealer for two decades, and cannot remember the last time a nugget over 100 ounces (2.8kg) has been found locally.

"It's extremely significant as a mineral specimen. We are 162 years into a gold rush and Ballarat is still producing nuggets - it's unheard of," Kent said.

The nugget was found with a state of the art metal detector called a Minelab GPX-5000, marketed as the best in the world, which Kent said made the find possible.

"There has been many prospectors that have walked past the exact place where the nugget was found and have missed it with an ordinary detector and did not have the technology to find it...that's why this guy found it.

"This detector he used is the best there is, it goes deeper and further into the ground, better than others," Kent said.

Kent said the find was unique with the nugget measuring at its longest 220mm, 140mm wide and 45mm at its deepest point.