Abbott's announcement comes two days after Canberra lifted its terror alert level to "high" on growing concern about Australian jihadists returning from fighting in Iraq and Syria.
Abbott said the deployment of about "400 air personnel and about 200 military personnel" followed a formal request from Washington for Australia to contribute to the international coalition against the rampaging Islamist group.
He said Australia was "not deploying combat troops but contributing to international efforts to prevent the humanitarian crisis from deepening".
"There are obviously further decisions to be taken before Australian forces will be committed to combat operations in Iraq," Abbott told a press conference in Darwin.
"Nevertheless, Australia is prepared to engage in international operations to disrupt and degrade ISIL (IS) because of the threat that this murderous death cult poses not just to the people of Iraq, not just to the people of the Middle East, but to the whole world including to Australia."
The US has been working to forge a coalition against IS jihadists in Iraq and Syria, with Secretary of State John Kerry in the Middle East to shore up Arab support.
AFP