More than half the nation's farming land is now officially drought-stricken, with 44 more areas declared eligible for exceptional circumstances (EC) assistance.
Deputy Prime Minister Mark Vaile and Agriculture Minister Peter McGauran unveiled the latest help, including income and business support and interest rate subsidies for all eligible farmers.
Eligibility requirements have been eased and $9 million has been provided for family and emotional counselling in an attempt to cut the appalling farmer suicide rate of one death every four days.
As of last week, the government had spent $1.2 billion on help for farmers since the current drought began in 2001.
But last week's $350 million expansion of EC assistance and today's $560 million package take the total to over $2.1 billion, with more taxpayer-funded help to come.
"We don't believe the day will ever come when the Australian community would be prepared to turn its back on its farming community, given the significant contribution that they make into our economy and certainly into the culture of Australia," Mr Vaile said.
However, there was no specific help for small businesses in struggling country towns.
"Our first responsibility needs to be to those farming families and that flows through to those businesses," Mr Vaile said.
Mr McGauran denied that the government was throwing money at farmers to keep them on unviable land, saying many producers had already walked away from farming.
"Exceptional circumstances assistance won't keep them on the land indefinitely. Eventually the farm debt and the loss of income catches up with farmers," Mr McGauran said.
National Farmers' Federation chief executive Ben Fargher backed the package, saying it was well-targeted, but he warned that more support might be needed if the drought did not break.
"We're certainly in discussions with the government about whether additional measures are appropriate, particularly in the area of management support, perhaps in water or fodder management," Mr Fargher told ABC radio.
Treasurer Peter Costello says the big dry, into its sixth year in some parts of the country, will hit economic growth.
Mr Costello is predicting a farm production recession, saying the drought is worse than Treasury officials expected in May when they put together the budget forecasts.