"Yes, we are paying a high price for progress in Afghanistan. But progress is being made", she said on Monday.
That progress includes training Afghanistan's fourth Brigade in Oruzgan province.
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Julia Gillard's suggested the handover of control of the province could happen sooner than later.
"Given the progress we now see, it may well be complete before the end of 2014", she told parliament.
Troop numbers will be reduced, but Australia will have a presence for the rest of the decade at least, with the SAS and commandos likely to be among them.
The Opposition Leader says victory is the best exit strategy, and opposes a hasty withdrawal.
But despite the bi-partisan support for the war, a poll taken earlier earlier this month reveals more than seventy per cent of voters want Australian forces to withdraw.
Richard Davis reports.
