The maximum subsidy under the federal pump program is being raised from $2500 to $6400 - around 80 per cent of the cost of an insulin pump.
The subsidy is available for children under 18.
The maximum amount is for families with an annual income below $64,240.
"The level of the subsidy operates on a sliding scale, gradually reducing to $500, or 10 per cent of the pump cost - whichever is greater - for families with an income of $101,045," Health Minister Nicola Roxon said in a statement.
"This boost to the program will ease the financial pressure on families when purchasing a pump for their child."
The number of children being diagnosed with type 1 diabetes is increasing by three per cent every year.
There is no cure, and unlike many cases of type 2 diabetes, it is not caused by diet or lifestyle, Roxon said.
There are about 140,000 people in Australia with type 1 diabetes, a genetic condition that sees the body destroy cells that produce insulin.
Source: AAP NewsWire
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