The new rate will be the equivalent of an extra $3.57 a day.
The increase is expected to be paired with stricter mutual obligation requirements.
The modest boost will not satisfy welfare and business groups who have spent years advocating for a meaningful increase to the dole.
The current supplement, worth $150 a fortnight, is due to end on March 31.
Cassandra Goldie from the Australian Council of Social Service said the permanent increase should at least match the temporary top-up payment.
"Anything below where the rate is now is a betrayal," she said.
Without government intervention the unemployment benefit would have returned to its pre-pandemic rate of $565 a fortnight, or $40 a day.
Senior ministers held a series of meetings to determine the new permanent JobSeeker rate.
Health Minister Greg Hunt supports increasing the dole.
"I think there's a fair case to ensure that there's greater equity going forwards," he told reporters in Canberra on Tuesday.
"This has been a difficult economic period for many Australians, but because of our health success we've been able to mitigate the economic challenges for Australians. But nevertheless there are ongoing challenges."
Greens leader Adam Bandt described the proposed increase as "a bloody insult".
"This decision will keep people going hungry. It will keep unemployed people facing homelessness," he said.
We must raise the rate above the poverty line.
The federal opposition has been calling to increase the JobSeeker rate for several years.
"$40 a day is too low," Labor frontbencher Bill Shorten told Nine.
"I don't think anyone can live on that and so therefore an increase is overdue and will be welcomed."
The unemployment rate has not been increased in real terms since the 1990s.
As the government prepares to increase the benefit, it is also putting the squeeze on unemployed people to find work.
There are about 1.2 million people on JobSeeker payments.
Social Services Minister Anne Ruston believes hundreds of thousands of welfare recipients are single, have no children and no medical barrier to full-time work.
"Just as the government takes seriously its responsibility to support people doing it tough, people accessing social security payments must take seriously their obligations to taxpayers to look for work and take it up," she told the News Corp tabloids.
Senator Ruston said various sectors were crying out for more staff.
"Whether it may be a short term job in agriculture or casual work in the caring industry, because modelling tells us that people who report earnings, even just a small amount, are at least twice as likely to exit the social security system," she said.