Ms Gillard said men and women were equal and nothing should be denied on the basis of gender.
Have your say on women in combat
"A few years ago I heard (former defence chief General) Peter Cosgrove say that men and women should have an equal right to fight and die for their country," she told reporters.
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"I think he's right about that and I think it's a good turn of phrase. It puts the choice very starkly."
Ms Gillard said many Australian women loved their country and wanted to be in the defence force.
But she said physical and intellectual capability had to be judged for every job.
"But if a woman has the physical capability and intellectual capability to do a particular job then I do not believe it should be denied her on the basis of gender," she said.
Women in combat is one of a raft of issues in a series of inquiries launched on Monday by Defence Minister Stephen Smith following the Australian Defence Force Academy sex scandal.
Smith 'handled matter appropriately'
Ms Gillard said Mr Smith had handled this matter appropriately and the inquiries were welcome.
"These reviews and inquiries have the full support of the chief of defence Angus Houston and our service chiefs," she said.
"They are the right way to deal with this matter and its ramifications more broadly."
Ms Gillard said claims that Defence head Air Chief Marshal Angus Houston had threatened to resign over his managing of the sex Skype incident at the Australian Defence Force Academy had been expressly denied.
"So it's a little bit disappointing that these false claims are stil circulating in the media," she said.
Ms Gillard said she would not be drawn on whether she held concerns about the culture within defence.
"There's an Australian Federal Police investigation so in those circumstances I don't want to speculate," she said.
"I believe all of these investigations and inquiries have to work through. I did lastweek make very well known my view about any incident that robs a women of her dignity and breaches her trust," she said.
