New drought support package for farmers

Drought-hit farmers will get another $333 million in federal support as part of an expanded package designed to stimulate local economies.

Prime Minister Tony Abbott will on Saturday announce the initiative to be detailed further in budget papers on Tuesday.

It will include $35 million to boost economic activity in the towns and regions badly hit by drought, AAP understands.

They will be "shovel-ready", local infrastructure and jobs projects designed to stimulate spending and use of resources in the community.

Another $25 million will be targeted towards pest and weed management programs in drought-hit areas, while $20 million will fund mental health and counselling services for more struggling farm families.

The bulk of the funds will go to continue the provision of cheap loans to debt-laden farmers, with $250 million to be set aside for the drought concessional loan scheme in 2015-16.

Further drought support measures will be announced in the forthcoming agriculture white paper, it is understood.

The package is expected to be welcomed by coalition MPs and the rural sector who have been strongly lobbying Mr Abbott to provide more drought relief.

Three-quarters of Queensland is drought declared, while northwest and central-west NSW have been hit by below-average rainfall.