PNG's National Disaster Centre said more than 2000 people had been buried alive by Friday's landslide in remote Enga province.
The Albanese government will send technical experts and $2.5 million in initial aid as the death toll continues to rise.
Prime Minister Anthony Albanese said Australia would stand alongside Papua New Guinea following the natural disaster.
"We hold out hope for Papua New Guinea, we hold out hope for the missing and strength to those who are now so desperately searching in what is an unimaginable tragedy," he told parliament on Tuesday.
Australia is sending shelters to the site of the disaster, Defence Minister Richard Marles says. (Lukas Coch/AAP PHOTOS)
"All Papua New Guineans are suffering in the wake of this terrible disaster, and we hold them in our hearts."
Australian defence forces have been working alongside Papua New Guinean counterparts as part of relief efforts.
Defence crews have also been involved in flying members of Papua New Guinea's national disaster committee to the site of the landslide, with a C-17 aircraft also ferrying supplies from Australia.
Defence Minister Richard Marles said defence personnel were working to transport 750 family-sized shelters to the site of the disaster.
"There is more that we are seeking to do. But, to be frank, part of the issue here is about not overwhelming a system which is currently under a lot of stress," he said.
Mr Albanese said Australia had been providing emergency relief supplies such as shelters and hygiene kits to the communities affected.
"At this most tragic of times, I want the people of PNG to know Australia is there for them and always will be," he said.
"Paua New Guinea is our nearest of neighbours and our closest friends, we stand with each other through the good times and the bad."
Authorities fear few survivors will be found in the rubble of the massive landslide. (AP PHOTO)
Treacherous terrain in the region and difficulty getting in aid has hampered rescue efforts, raising fears few survivors will be found.
The head of the International Organisation for Migration in PNG Serhan Aktoprak said the conditions on the ground were hampering rescue and aid efforts.
Rocks were still falling from the mountain, soil was cracking and water was flowing under the debris.
Pacific Minister Pat Conroy said the support provided by Australia was only an initial contribution, and more aid would flow at the request of PNG's government.
He said the true extent of the disaster was not yet known.
"This is an incredibly inaccessible part of Papua New Guinea and it's a really challenging process for everyone involved," Mr Conroy said.
Opposition Leader Peter Dutton said the scenes from the landside and its devastation was unimaginable.
"I want Prime Minister (James) Marape, a dear friend to many of us, but to all Papua New Guineans, to hear the very clear message that Australia will always stand shoulder to shoulder with the people of Papua New Guinea," he told parliament.
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