The federal government will spend more than $800 million rewarding Australia's top school teachers, helping disabled school students and extending the school chaplain program.
This year's federal budget pumps $872 million of new investment into Australia's schools.
The big ticket item is $425 million over four years in bonus payments to high-performing teachers - one of Labor's key education election promises.
Under the program, the top 10 per cent of teachers will get a bonus of up to ten per cent in their salary from 2014.
"This initiative will help to recognise the great work of our teachers and reward them for their valuable work," School Education Minister Peter Garrett said in a statement.
The government will also inject another $222 million into the National School Chaplaincy Program.
The funding will extend the program for the 2700 schools that already have a chaplain and allow up to 1000 extra schools to get one.
As announced last week, the government will also spend $200 million to give extra support to students with disabilities. There are more than 164,000 students with disabilities currently attending Australia's schools.
The government will also spend $18.1 million over four years on the Teach Next program, which aims to help professionals get qualifications to fill shortages for maths and science teachers.
Changes to the family tax benefit encouraging parents to keep their older teenagers in school will cost $771.9 million.
In higher education, the government is investing a further $1.2 billion over the next four years to fund growth in university enrolments.
Tertiary Education Minister Chris Evans said the "landmark investment" would fund more than 480,000 undergraduate places at public unis in 2011/12.
The investment comes on top of $2.77 billion in funding already committed by the Gillard government, Senator Evans said.
"We are determined that all Australians - regardless of their background or where they live - should have the opportunity to gain a university education," he said in a statement.
The government also confirmed reports it would halve the 20 per cent discount for up front payments of HECS fees in a bid to save $479 million over four years.
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