Looking at the HTML specification for a-tag is says that href
is a hyperlink.
When I answered this in 2014, it said that href was an URI and that URI was defined in RFC3987 Internationalized Resource Identifiers. If you follow the links from hyperlink, you find a link to the URL: Living standard that mentions both RFC 3986 and RFC 3987 in the Goal.
From RFC 3987:
Abstract
This document defines a new protocol element, the Internationalized
Resource Identifier (IRI), as a complement to the Uniform Resource
Identifier (URI). An IRI is a sequence of characters from the
Universal Character Set (Unicode/ISO 10646). A mapping from IRIs to
URIs is defined, which means that IRIs can be used instead of URIs,
where appropriate, to identify resources.
So the simple answer is: yes, you can use idn in href, at least for HTML 5 documents. You should however look at RFC 3987 section 4 if your text is bidirectional.
This answer was updated in 2018, after JohnT asked me to update the broken links.