The next generation of insulin pumps needed by 130,000 Australians with type 1 diabetes are to be made available at a fraction of the thousands of dollars a year they currently cost.

Health Minister Mark Butler says access to the Omnipod DASH Insulin Management system will be subsidised from December 1.

The system involves a waterproof adhesive pod which delivers insulin to the patient and a touchscreen programming device.

The pods are disposable and replaced every three days, and will be available through the National Diabetes Services Scheme at community pharmacies.

General patients will pay a maximum co-pay of $29.30 per month, with concession card holders paying $22.20 per month.

The touchscreen device is to be added to the list setting out the prostheses that private health insurers must pay benefits for, meaning it will be free with private cover.

Australians not with a private insurer can access the device through a subscription fee to maker Insulet.

Previously patients were paying over $400 per month for the pods and device.

Mr Butler said subsidies for the wearable technology were proposed under the previous government a year ago.

"The Albanese government is continuing to make life-changing technology accessible for Australians living with type 1 diabetes," he said.

"Subsidising this next generation technology means freedom of choice for Australians with type 1 diabetes, as well as the freedom from wires and tubes."

Mike Wilson, CEO of non-profit diabetes funder JDRF, welcomed the funding.

"Providing people who live with type 1 diabetes more affordable access to the management technologies of their choice is key to improving health outcomes and reducing financial burden," he said.

"It's wonderful that Omnipod will now be more accessible to more people who want it."