Prime Minister Tony Abbott argues Australia's farmers are a special case, deserving of government support when times are tough.
Almost three-quarters of Queensland and more than half of NSW is in drought, with some parts having suffered its consequences for more than two years.
It wasn't that long ago many areas emerged from a nine-year dry spell, often called the "millennium drought".
The prime minister took a look for himself last week when he toured Bourke, Broken Hill and Longreach.
He was told of sheep and cattle graziers selling off all but their core breeding stock, lambs being taken by wild dogs competing for scarce water and food, workers having to be put off because they can't be paid and debts running into the millions.
Abbott says that because the drought is "akin to a natural disaster" and the only way to address it is hope and pray for rain, governments have a role to play.
Drought concessional loans totalling $280 million will be allocated to give eligible farm businesses the resources to recover from the effects of drought.
Up to $12 million will be added to existing emergency water infrastructure schemes, including supplementing those in NSW and Queensland.
Another $10 million in assistance will be available for pest management in drought-affected areas, and $10.7 million will help increase access to social and mental health services.
Mr Abbott said the package was refined by the government after his recent tour of western NSW and Queensland.
"The package is largely building on existing programs but it is making it more responsive to the particular needs of farmers hit by drought," he told reporters.
He said the package is not a "special deal" for farmers, nor was it a super-favourable social security regime.
"A farmer in trouble is in a very difficult situation and a rather different situation to most of us when we are in trouble."
"If your farm is in dire drought, you can't sell, you can't borrow, you can't live but you've got no money."
The opposition agriculture spokesman says he welcomes the package, but the government should have announced the assistance sooner than it has.
"It will be welcome by many struggling farming families but I should say that it is a package that should have come about a month ago and every week, in fact every day for a struggling farm family is a long day.
"I have been urging for more than a month now for the Prime Minister to do most of what he did today and on that basis of course the package has the opposition's support."
The National Farmers' Federation chief executive Matt Linnegar says the package fulfils one of two requests the group made to the government.
"The first of those is a short-term response to the drought we are seeing right no," Mr Linnegar said.
"The second of those is the long-term response to drought policy in this country. What we've seen today from the prime minister and from Minister (Barnaby) Joyce is a response to the former, which is of course those short-term measures, the here and now. That is farm families in trouble in quite a few states right now."
WHAT'S IN THE DROUGHT ASSISTANCE PACKAGE FOR FARMERS
-Package worth $320 million
-Criteria for income support to be relaxed from March 3 instead of July 1.
-Drought concessional loans totalling $280 million for eligible farm businesses
-$12 million towards emergency water infrastructure schemes
-$10 million for pest management
-$10.7 million to boost mental health support
(Source: Prime Minister's statement)
