State Premiers are also due to meet this morning to tackle the country's water crisis, amid fears the Murray-Darling basin could run out of water altogether.
Mr Howard said the government would look at "fine-tuning" the exceptional circumstances drought assistance package next week and decide whether other regions should be declared to be drought-affected.
"The government at a federal level will do all it reasonably should to help Australia's farmers through this drought," Mr Howard told Southern Cross Broadcasting today.
"Obviously we won't throw money away but farmers can rest assured where they are entitled to assistance they will get it."
Mr Howard said the implications for farmers were enormous and the implications for the nation also were significant because all Australians strongly identified with the bush.
"When the bush is suffering we feel it," he said.
"I would expect this drought to leave a very big impression on the Australian psyche."
Dire predictions
Yesterday Treasurer Peter Costello warned Australia was looking at a rural recession, with the situation facing regional areas set to worsen.
The grim outlook came amid new predictions that the big dry could bring the smallest wheat harvest in more than decade.
Economists already predict the conditions, which could cut the nation's valuable winter crop in half, will strip half a percentage point off economic growth this year.
"This is shaping up to be the worst drought Australia has experienced," said Mr Costello.
"We are facing up to another year of terrible drought and it's going to be a hot summer," he said.
"Farm production fell markedly in the last quarter and we could be looking at recession in terms of farm production, that is farm production going backwards."
The conditions this week prompted Deputy Prime Minister Mark
Vaile to write to banks and financial institutions asking them to show mercy to farmers, and the issue is likely to be a focus of the Nationals' federal conference in Canberra this weekend.
Grim summer ahead
The peak grain growers' body, the Grains Council of Australia, said this year's wheat crop could be 10 million tonnes or less -- the lowest since the 1994-95 harvest.
Chairman Murray Jones said the situation was deteriorating by the day, as wheat exporter AWB confirmed no wheat exports would take place from the east coast this summer.
"I think at this point we've gone almost beyond recovery because once we get this far into October, rain now would be possibly too late for many of them.
Bleak forecast
The Bureau of Meteorology's latest drought analysis shows rainfall deficiencies intensified in NSW, Victoria and South Australia in September.
Conditions eased in Western Australia -- the nation's biggest wheat producing state -- during the month, but rainfall totals between June and September were severely lacking across the whole of the southern mainland.