With environmentalists linking Australia's worst drought in a century to climate change, the government announced spending of 741 million dollars (617 million US) to counter the threat.

The handout to households installing solar energy systems will be doubled to 8,000 dollars (6,600 US), with the programme estimated to cost about 150 million dollars over five years.

The government will also set up a climate change centre to lead national research into adaptation strategies, support practical action in vulnerable sectors and manage risks in partnership with other groups.

An extra 43.6 million will be allocated to the government science agency CSIRO to develop an "adaptation flagship", predicting climate change and planning strategies to cope with it.

"We must help prepare vulnerable regions, communities and industries for the potential impacts of climate change," Environment Minister Malcolm Turnbull said.

The budget also includes 197 million to help prevent deforestation in the developing world.

"Our responsibility is to manage the environment for future generations," Treasurer Peter Costello told parliament.

"One of the serious long-term threats is global warming," he said.

He announced a tax deduction costing 23.6 million over four years for the planting of forests which act as sinks for greenhouse gas emissions.

Another 18.5 million over four years will prepare for the introduction of offshore carbon capture and storage.

Greenpeace chief Steve Shallhorn said the organisation was glad Costello had used the term climate change in his budget speech, but he had not introduced any real measures to battle the threat.

"With this budget the treasurer moves from being a climate denier to a climate pretender, and what Australia needs is a climate champion. We didn't get one," he said.

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