Rising spending has also defied strong public opposition to the war.
The Australian Strategic Policy Institute says polling has shown opposition to be stronger than during the Vietnam War, although the cost has taken second place to concerns over casualties.
Last week, two more soldiers were wounded when their Bushmaster armoured car struck a roadside bomb, bringing to five the number injured this month and to 218 the total wounded since the war began.
Thirty-two diggers have been killed.
In last year's budget, A$1.2 billion was committed to operations in Afghanistan and the wider Middle East.
The bulk was directed to the war, with major regional operations outside Afghanistan confined largely to the deployment of a Navy frigate in the Gulf and the Horn of Africa.
But the Daily Telegraph reported that the cost of operations in 2011-2012 had risen to A$1.6 billion, including new equipment and funding for the Afghan National Army Trust Fund.
The five-year trust programme will cost A$200 million.
With new weaponry and systems to better protect diggers, the total cost of the war since Australia returned in force in 2006 has soared to more than A$7 billion.
Last month, the Government announced the purchase of two new Chinook helicopters following the loss of one of its fleet in Afghanistan, four special vehicles with ground-penetrating radar to detect bombs at a cost of A$70 million, and upgrades for its Bushmasters.
Earlier in the year, diggers had been provided with a system to warn of rocket attacks, lighter body armour, upgraded combat helmets and longer range machine guns.
Last month's budget committed A$480 million to force protection measures in 2011-12. Under existing plans Australia intends to withdraw most of its troops by 2014, although Defence Minister Stephen Smith said in his most recent parliamentary statement on the war that with the pace of training for the Afghan National Army's 4th Brigade - Australia's main role - troops may leave earlier.
Within the next six months Australian forces are expected to reduce their presence to four key bases in Uruzgan, after handing most other bases to the ANA.