Rejecting reports of an Australian drawdown in Fairfax newspapers on Wednesday, Mr Smith said that was a surprise to him and to Defence head Air Chief Marshal Angus Houston.
Mr Smith said Australia had about 1550 personnel in Afghanistan with about 700 directly involved in mentoring and training Afghan troops.
"We believe we are on track for our mentoring and training mission to be successful over the next 2-4 years, but we certainly don't see any drawdown over the next immediate period, 12 months to two years," he told the ABC.
Mr Smith said the government saw no basis to the Fairfax story.
Fairfax newspapers reported that defence had drawn up secret plans to reduce troop numbers in Afghanistan, starting this year with a 25 per cent reduction as some patrol bases were handed over to the Afghan National Army.
That was aggravated by a funding squeeze from the high cost of disaster relief operations, the report said.
Mr Smith said the advice from defence was that the current troop commitment was right to meet the mission requirement of eventually handing security to Afghan security forces.
He said the Lisbon NATO summit in November agreed on the 2014 transition plan and that would be further considered at the meeting of NATO and ISAF defence ministers in Brussels in March.
"We can can only transition when the Afghan forces are at a capacity to take on that leadership role," he said.
"We don't expect to see a transition in Oruzgan province other than within our 2-4 year timetable. Other provinces will transition to Afghan security earlier than that."
"We don't want to lose gains we have made in recent times and those gains as we all know have been at the cost of 22 Australian lives."
Mr Smith said operations in Afghanistan, the Solomons, East Timor and Sudan were determined on the basis of the national interest and proper resourcing, not money.
"Yes, we have a big strategic reform program, but that will not be allowed to and will not cut into the allocation of resources and the decisions that we make about providing contributions to
peacekeeping arrangements of Afghanistan or staring down international terrorism," he said.
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