Australia has pledged to provide $6.4m to Zimbabwe to help provide clean water and draw health professionals back into the system, becoming the first Western country to announce the aid.
In the past Australia has only provided humanitarian assistance amid concerns the regime of President Robert Mugabe could somehow misuse the funds.
The time has come for additional assistance, Australian Foreign Minister Stephen Smith told parliament but added that Australia was under no illusions about the fragility of the political situation, in the African country.
Recently the President Mugabe entered a power-sharing agreement with opposition leader Morgan Tsvangirai after an election that most international observers called a farce. In spite of the concession to international pressure, Mugabe retains most of the power in the battered state.
According to analysts, the new government will be heavily dependent on Western donors and investors to rescue Zimbabwe's crippled economy.
Half of the Australia’s new development assistance will be spent on water sanitation and infrastructure.
Mr Smith said the money would be spent through UNICEF.
Water-borne cholera has so far claimed more than 4000 lives in Zimbabwe, according to World Health Organization figures, while more than 89,000 people have the disease.
The US and UK governments remain skeptical and first want to see genuine power sharing between the opposing parties before restoring financial aid to Zimbabwe.