Treasurer Wayne Swan is expected to announce the extra funds when he delivers his budget on May 8.
He said he was proud to make the commitment of extra funding especially given his personal fight against cancer.
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Mr Swan is a prostate cancer survivor.
"I'm here today because my cancer was detected early, which is why I'm so proud of this investment, which will quite simply save more Australian lives," he told the Herald Sun on Saturday.
Bowel cancer screening is currently free for people aged 50, 55 and 65.
The $49.7 million of government funding will extend it to people turning 60 from 2013 and 70-year-olds from 2015.
Independent MP Tony Windsor, who has been campaigning for more funding for the screening program, said he was delighted the government was acting to fight cancer, despite the pressure to deliver a budget surplus.
"Every year, Australia spends around $1 billion treating bowel cancer," he said in a statement
"While you can't put a dollar value on saving lives, identifying bowel cancer early will also save on treatment costs."
