Speaking after a fast-tracked national cabinet meeting, Prime Minister Anthony Albanese said on Saturday continuing the payment was appropriate with cases rising across the country.
"I want to make sure that people aren't left behind, that vulnerable people are looked after and that no-one is left with the unenviable choice of not being able to isolate properly without losing an income," he told reporters in Sydney.
The emergency payments for people who don't have sick leave but are forced to isolate due to COVID-19 will be reinstated through to September 30 this year.
The scheme originally lapsed on June 30.
The federal government will also reinstate through to September 30 the national crisis payment for people with COVID-19 who are in severe financial hardship, Mr Albanese said.
Australian Medical Association national president Omar Khorshid says he was surprised by the initial decision to scrap the payments, given people are still required to isolate if they test positive.
"The last thing you need when you have such huge numbers of cases around is for the government to pull its supports for people to do the right thing," he told the ABC on Friday.
"Generally the government has extended the measures we continue to need because the pandemic is still here and affecting us."
Mr Albanese was briefed on Australia's current and expected caseloads by Professor Kelly and Health Department secretary Brendan Murphy on Friday.
As Australians seek booster vaccines across the country, the government has also faced calls to extend the free rapid antigen test program until the end of winter.
Additionally, Mr Albanese acknowledges there has been a rapid rise in the use of antivirals in the past week.
The government expanded eligibility for fourth vaccine doses to anyone aged 30 and over earlier this month.
As of Thursday, nearly 14 million people had received three or more jabs, while almost three million had received four or more.
Acting opposition leader Sussan Ley says Mr Albanese "owes an apology to the tens of thousands of Australians who have faced stress and uncertainty" as a result of ending the pandemic payments.
Greens leader Adam Bandt has urged Mr Albanese to extend them as well as free RATs for concession card holders.
More than 28,000 fresh infections and 71 deaths have already been reported across NSW, Victoria, Tasmania, Queensland and the Northern Territory on Saturday.
Australia recorded more than 43,000 cases and 66 deaths on Friday, with 4602 people in hospital.
LATEST 24-HOUR COVID-19 DATA:
NSW: 11,082 cases, 38 deaths, 2024 in hospital with 66 in ICU
Victoria: 9982 cases, eight deaths, 802 in hospital with 34 in ICU
Tasmania: 1662 cases, two deaths, 138 in hospital with five in ICU
Northern Territory: 424 cases, one death, 61 in hospital with two in ICU
Queensland: 5795 cases, 22 deaths, 921 in hospital with 14 in ICU
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