With a record total purse of nearly $31 million, prize money for the fourth round, quarterfinals and semifinals has gone up by an average of more than 14 percent.
Prize money for the three rounds of qualifying has also increased almost 15 percent, while first-round doubles prize money has increased more than 30 percent.
Players' council representatives Roger Federer, Novak Djokovic and Andy Murray had pushed for a more equitable distribution of prize money, saying it was vital for the lower-ranked players in the 128-entry Grand Slam draws to receive extra prize money.
"Our motivation is to make a major contribution toward helping ensure professional tennis players can make a decent living,'' Australian Open director Craig Tiley said in a statement on Thursday.
"As we have said in the past, it is a real issue and needs to be urgently addressed throughout the sport. That is why the biggest increases are in the earlier rounds, qualifying and doubles which in effect rewards a lot of the lower-ranked players for their achievements which, by the way, should not be undersold.
"To just reach the main draw of a Slam, a professional tennis player has to be among the top 100 in what is one of, if not the most, competitive professional sport in the world. At the same time, we also still want to continue to recognize the incredible drawing power and contribution of the top players.''
The Australian Open will be held from Jan. 14-27.
- AP