Coach Bert van Marwijk snubbed the country's most prolific goal-scorer for the opening Group C matches against France and Denmark despite the team's struggles in front of goal.
The lack of game-time afforded 38-year-old Cahill, who has scored five of his 50 international goals at three previous World Cups but barely played in the past six months, has stoked criticism from Australian fans and media.
"We have three strikers that are trying to compete at the minute to put their hand up for this next match," Milligan told reporters at the Socceroos' Kazan base.
"I guess all the talk about Timmy and everything, you guys don't see what we see in camp. While I'm sure, undoubtedly, he's frustrated that he's not had his shot yet, the amount of help that he gives to the players around him, including talking today before training, is unbelievable.
"What happens on Tuesday (against Peru) I'm not sure; what I do know is if Tim is called upon, he'll be more than ready."
After Thursday's 1-1 draw against Denmark, Australia need to beat eliminated Peru in Sochi and hope France defeat the Danes to have a chance of reaching the knockout rounds.
Milligan, playing in his fourth World Cup, said the Socceroos had paid too much respect to Denmark early in Samara and need to show more confidence against Peru.
"I think we need to go into the match with a little bit more belief in what we can do and what we can achieve because we know it's there, I think we showed it," said the 32-year-old.
"And I think if we start the game from the very beginning like that, then I don't think we're scrambling for a goal in the last 15 minutes.
"We're all very confident (of making the knockouts).
"Although yesterday we fell a little bit short, we know that there's still a lot more in this team."
Australia's epic qualifying campaign, in which they won two sets of playoffs to reach Russia, would put them in good stead for Tuesday, he added.
"While Peru's going to be an extremely difficult task for us, we have the next few days I guess to fine-tune a few more things," he said.
"I think that this group, after everything that the last four years has brought, it's just fitting that it comes down to this last game, us having to win.
"So, I think the scene is set for us. While we can't control everything else that happens, I know that we will give absolutely everything that we have on Tuesday."