Australia's Federal government has approved that BlueScope can draw from the funds allocated for the carbon tax package much earlier than planned.

Australian Prime Minister Julia Gillard made this announcement after BlueScope said that it would cut down 1,000 jobs in New South Wales and Victoria with the closure of its two facilities in the area.

BlueScope Steel confirmed on Monday that the closure of these production facilities in Australia is as a result of some $1.05 billion full year loss.

Ms Gillard said in a statement published by BigPondNews.com, the government would introduce a new advance facility under the $300 million Steel Transformation Plan (STP) to support jobs and to ensure the future of the steel industry in Australia.

She said that the financing facility will allow eligible participants to draw down an advance on their future entitlements under the STP, to meet short-term cash flow issues and help the industry become more efficient and sustainable.

"It will allow BlueScope to bring forward into 2011/12 up to $100 million of the payments nominally allocated to it under the STP," Prime Minister Gillard said.

In the joint statement with Treasurer Wayne Swan, Industry Minister Kim Carr and Climate Change Minister Greg Combet, she said the provision of the new facility was made after a number of commitments were given by BlueScope to the government in relation to its planned restructure.

BlueScope said in a separate statement that the company has committed that the de-activation of the Port Kembla blast furnace No.6 in NSW and metal coating line No.5 at Western Port in Victoria must be in a manner that will enable them to be reactivated, if there is a sustained improvement in steel markets that enables profitable sales to resume.

The company also said it would give affected workers all their legal entitlements, and BlueScope must continue as a significant employer in the NSW Illawarra region over the term of the STP - five years from 2012/13.

BlueScope must also remain committed to steel production in Australia.