The invention provides a preparation method and application of waterborne polyurethane. According to the method, phosphoric chain expanding agents are added into polyurethane prepolymers; constant-temperature reaction is performed for 1 to 2h at 40 to 60 DEG C; water is added; stirring and emulsification are performed; triethylamine is added for neutralizing acid in a reaction system; the waterborne polyurethane is prepared, wherein the phosphoric chain expanding agents are obtained through mixing organic phosphate and m-dihydroxybenzene and performing constant-temperature reaction at 120 to 135 DEG C for 10 to 15h. The waterborne polyurethane prepared by the method can be applied to paint, leather surface treatment agents or fabric surface treatment agents; meanwhile, excellent hydrophobic property, flame resistance performance and mechanical property can be achieved; the defect that the waterborne polyurethane in the prior art cannot simultaneously reach the three excellent effects is overcome.