Prime Minister John Howard said without an extra effort, the fight against the militants would not be won. He warned the country to prepare for casualties.
Six Canadian soldiers died at the weekend in the worst single incident for the Nato-led force since 2005.
They are based at Tarin Kowt in Uruzgan province.
Mr Howard said the extra troops would include 300 special forces.
"We're not losing the war but we will not win it without renewed and increased effort," he said.
He also criticized those European countries which, while contributing troops, have placed a series of restrictions on the kind of activities their deployments can undertake.
Some of these caveats were lifted at a Nato conference late last year, but
Nato has more than 30,000 troops in
But it is a major additional commitment for Australia - and it is the quality of the troops and what they are prepared to do in terms of combat that are seen by Nato as more important than the basic numbers, he adds.
Dangerous region
The total Australian deployment in
"We have done this against the background of deterioration in the security environment in southern
He said the special forces commandos would be sent to Uruzgan province, where a smaller task force operated for a year until last September.
"Their role will be to enhance provincial security by disrupting Taleban command and control supply routes, and they will directly support the Australian reconstruction task force," Mr Howard said.
The area is in the south-east of
"I should make it clear that all of the intelligence advice suggests that there is a heightened security risk," Mr Howard said.
"There is the distinct possibility of casualties, and that should be understood and prepared for by the Australian public."
Other deployments will include air force radar crews in
Taleban resurgence
Last year saw the fiercest fighting in Afghanistan since coalition troops ousted the Taleban in 2001, with some 4,000 people believed to have been killed - about a quarter of them civilians.
The situation has been getting worse still in recent months.
The Taleban are maintaining strong opposition to Nato, particularly in the south and east.
Mr Howard's government has also sent about 1,500 troops to
Labor has so far supported
Mr Howard said he had discussed the increased Afghan deployment with Afghan President Hamid Karzai and US commanders during his visit last month to
Photo caption
Australian and US troops in Zabul province,