The Morrison government is targeting small businesses hit by the long dry and farmers needing finance in a new drought response package.
Scott Morrison has announced the details of a new drought stimulus package centred on zero-interest loans for farmers and small businesses.
"This gives them massive breathing space," the prime minister told reporters in Canberra on Thursday.
The federal government is also releasing 100 gigalitres of water along the Murray River, which will be made available to farmers at discounted rates to grow fodder.
The water is expected to grow up to 120,000 tonnes of fodder for breeding stock in desperate need.
"This is a practical measure which both deals with the hardship along the Murray, but importantly, deals with making available more fodder," Mr Morrison said.
The Commonwealth will help South Australia turn on a desalination plant in return for the additional flows.
The deal will cost the federal government almost $100 million and will be reviewed in April next year.
Up to 6000 farmers are expected to access the water originally destined for Adelaide, and it must be used to grow fodder.
Each of the 122 drought-affected councils and shires along the east coast will be given an extra $1 million, if they need it.
At least six new shires and councils will also be offered $1 million.
A new program will allow small businesses dependent on agriculture to apply for loans of up to $500,000 that can be used to pay staff, buy equipment and refinance.
There will be $10 million for schools facing hardship as a result of the ongoing drought, including fee concessions for boarding students.
Another $5 million will help assist childcare centres experiencing decreased demand.
The government will redirect $200 million from the Building Better Regions Fund to support drought-stricken communities, and pump an extra $138.9 million into road projects.
The prime minister has rejected calls from the National Farmers' Federation to offer exit packages to farmers that want to leave the land, arguing the value of properties had held up strongly over the past five years.
"We're here to keep farmers on their properties," Mr Morrison said.
He praised the NSW government for offering fodder and freight subsides and chastised Queensland and Victoria for lagging "a long way behind".