Austria is one of several eurozone states that must give the green light to the rescue package agreed this week to save Greece from financial collapse, its third bailout in five years.
The measure passed with a clear majority in the parliament on Friday, despite opposition MPs voting against it.
Austria would contribute €55 million to the massive funding, which would come out of the European Financial Stabilisation Mechanism.
Chancellor Werner Faymann described the loan as a "serious chance" for Greece, which he said was facing "a tough way".
"We belong in this joint Europe, we benefit from it and therefore we also carry responsibility for this joint Europe," he told parliament amid loud applause from members of his SPÖ party.
The ruling coalition of Social Democrats (SPÖ) and the conservative People's Party (ÖVP) have a two thirds majority in parliament and both supported the bailout deal.
Green party MPs were not in favour of a third bailout, but said that a 'Grexit' must be avoided.
The head of the liberal NEOS party, Matthias Strolz, argued that the bailout package is another step in the wrong direction, as 92 percent of the bridging loan will go to repaying its debts and bailing out banks - rather than helping the people of Greece.
Greece has debts of €320 billion. Last month it became the first developed country to fail to make a repayment loan from the International Monetary Fund.
The head of the right-wing Freedom Party, Heinz-Christian Strache, argued in favour of a Grexit and called for a referendum on whether Austria should support the bailout, "before another Austrian cent is promised".
"This is not an aid package for Greece, it's a package for banks and speculators," he said.
SPÖ club boss Andreas Schieder said it "was not an easy decision" but that a Grexit would be a disaster for Greece's people and economic development, and would have a negative impact on Austria's economy.
The ÖVP's finance spokesman Andreas Zakostelsky stressed that the bailout deal requires Greece to deal with hard consequences but paves the way for lasting reforms.
Germany's Bundestag also gave the go ahead on Friday for talks on a third Greek bailout, joining other nations including France and Finland.