He said the war would cost hundreds of millions of dollars, but not as much as many people feared, with some analysts estimating the cost to Australia at between 600 million (360 million US) and 800 million dollars.

But Howard said the use of regular military forces meant many of the costs of the deployment were already covered.

"It's going to cost some hundreds of millions," he told commercial television, adding: "We will still have a surplus budget."

He said the government would maintain a surplus through strong financial management, limiting spending to priority areas such as defence, and the economy would continue to produce solid revenue.

Defence Minister Robert Hill said the budget drain caused by the war would not lead to major defence spending projects being deferred or scrapped, such as new air-warfare destroyers and F-35 fighter aircraft.

"All our major projects are progressing," he added.

Hill said new projects were being funded through economic growth, boosting the current defence spending figure of 1.9 percent of GDP.

SPACE.WIRE