The cash injection takes funding promises for the government's National Health and Hospitals Network to $7.3 billion over five years.
Earlier this year the government set out an ambitious reform agenda, which included taking over the majority of hospital funding from the states and territories.
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Treasurer Wayne Swan, in his annual budget address, called the changes some of the most significant ever seen in Australia.
"These are landmark reforms – the biggest since the introduction of Medicare – and they are fully funded over the forward estimates," Mr Swan says.
"We have taken responsibility for our health and hospital system and we are delivering our improvements in a financially responsible way in this budget."
Primary care is central in the budget boost, receiving about $1.2 billion of the $2.2 billion allotted. The total funding for GP and primary care is expected to jump from $76.4 million in 2010-11 to $458.8 million in 2012-13.
The money will be used to establish Medicare Locals and personally-controlled electronic health records.
The funding boost will also benefit nurses, with additional training being offered in aged care and dealing with the needs of rural and regional communities.
Funding for the health industry's workforce is expected to skyrocket from $74.8 million in 209/10 to $516.8 million in 2013/14.
Another key area of growth is expenditure on mental health services, which is likely to cost $123.2 million over five years.
The government will save $89.4 million a year by ceasing to fund the capital component of the Better Access to Oncology Radiology. Changes to the Pharmaceutical Benefits Scheme will save the government $1.9 billion over five years.
