Prime Minister Kevin Rudd has committed $151 million over four years to a program to boost awareness and to better equip hospitals for organ transplants.
While Australia is on par with other western countries for donor registration, the US and members of the European Union proportionately perform two to three times more organ transplants each year.
About 1,800 people are believed to be waiting for an organ transplant at any one time in Australia.
Last year, 198 people donated organs, slightly down from 202 the previous year.
Kevin Rudd, a donor tissue recipient himself, on Wednesday announced the new program, saying commonwealth and state governments had been "stuffing around" for too long over who would fund a dedicated program.
"It's time we actually got on with it, to make it work," Rudd told reporters in Sydney on Wednesday.
The funding includes $67 million for dedicated specialist organ donation doctors and related staff at public hospitals.
Another $46 million will be used to establish an independent national authority to coordinate national organ donation initiatives.
Hospitals will receive a total of $17 million to meet additional staffing needs, extra beds and infrastructure costs associated with the program, while $13.4 million will allow national public awareness and education campaigns to continue.
Rudd also highlighted the need for counselling for families of potential donors who are struck with grief when loved ones face certain death.
"The challenge for us is to make sure this works on the ground," he said.
"We want to help hospitals do their job."
About six million Australians, out of an eligible pool of 15 million, are registered donors, according to support organisation Transplant Australia.
However, just 200 of the 1,300 people who become eligible each year end up donating their organs.
Transplant Australia chief executive Chris Thomas said that in 20 per cent of cases, bereaved families were not asked if they would allow organs to be donated.
About 40 per cent of families said no to organ donation while the other 40 per cent consented.
"If we can make sure that those 20 per cent are asked, that's an immediate improvement," Thomas told reporters.
"And if 40 per cent of relatives are saying no, we want to decrease that by better education about the benefits of transplantation."
Thomas said the extra funding and staff would increase the chances of more transplants being performed since most donations arose through unanticipated, catastrophic head injuries.
About 60 per cent of all organ transplants are kidney-related, and Wednesday's announcement was welcomed by Kidney Health Australia as both a life-saving and cost-cutting measure.
"Dialysis costs Australian hospitals $83,000 per person per year, compared to the cost of a kidney transplant - $65,000 per recipient for the first year and $11,000 a year, each year following," chief executive Anne Wilson said in a statement.
Rudd, who received an aortic valve transplant years ago, implored people to register themselves as donors.
"I think that's a really important step forward," he said.
