The Abbott government will pump $559 million into medical research funding to find better treatments for common diseases such as cancer, diabetes, asthma, arthritis and cardiovascular disease.
Prime Minister Tony Abbott wants the funding to also help find new ways of tackling mental illness, dementia and indigenous health.
His first major health announcement, at The Alfred Hospital in Melbourne on Wednesday, came after Mr Abbott toured a laboratory to speak with researchers about future research to treat burns patients.
"The government is determined to do everyone we reasonably can, even in these fiscally challenged times to ensure Australia's health and medical research continues," Mr Abbott said.
"At this point in time, we don't have additional funding but we are determined to ensure that the funding goes as far as it can that's why there are some changes coming to increase the length of most NHMC grants so people spend more of their time researching and less time filling out forms."
Investing and supporting medical research is one of the best long-term investments in health that a government can make because it improves life expectancy and takes pressure off the hospital system, the government says.
The funding will support 963 grants across three National Health and Medical Research Council (NHMC) research schemes and support five fellowship schemes.
Victoria will receive $236.4 million, with the state's Minister for Health David Davis saying the grants would strengthen Victoria's hospitals and research institutions internationally.
"These grants can only help to build on best practice and help us get one step closer to tomorrow's cures," Mr Davis said.