The current drought is having an immense impact on rural Australia and is one of the most severe in the last 100 years Prime Minister John Howard

Fresh cash injections of 368m Australian dollars (�131m; $207m) over the next three years will come on top of A$360m already pledged.

The cash will be welcome, not least since the drought is set to last at least until April next year.

Some of the cash will be spent on income support for farmers suffering severe rainfall deficiency.

In addition, farmers will be granted cheap loans.

"The rationale for that is very much bound up in giving people the capacity to maintain their breeding stocks and to prepare themselves for recovery from drought," said Prime Minister John Howard.

Immense impact

So far the drought has hit Australia's rural economy to the tune of $1bn, according to The Australian Bureau of Statistics, and the figure is set to rise.

Crops are expected to be 60% smaller this year than last, according to the National Farmers' Federation.

And dairy farmers predict that up to $1bn will be shaved off their export earnings.

By the time the drought ends, total losses could have reached $5bn, the statistics bureau predicted.

"The current drought is having an immense impact on rural Australia and is one of the most severe in the last 100 years," said Mr Howard.