Rudd said he welcomed a "big Australia" as a sign the huge but sparsely peopled country was continuing to develop. Australia's current population of 22 million is predicted to surge to 35 million in the next four decades.
"I actually believe in a big Australia, I make no apology for that. I actually think it's good news that our population is growing," Rudd told public broadcaster ABC late Thursday.
"I think it's good for us, it's good for our national security long term, it's good in terms of what we can sustain as a nation," he added.
Treasury Secretary Ken Henry earlier warned the rapid increase, predicted by the government last month, would "test the limits of sustainability".
"Our record has been poor, and in my view, we are not well placed to deal effectively with the environmental challenges posed by a population of 35 million," Henry said in an address Thursday.
Treasurer Wayne Swan has warned the economic threat of a booming and ageing population was as grave as that posed by climate change, driving up government spending and slowing growth.
"That is why we are taking such a leading position on climate change, but also the long-term sustainability of the Murray Darling (river system) and the proper provision of water supplies for the future," Rudd said.
"But let's be optimistic about the fact that this country is growing, so many around the world are heading the other way."
Australia, the world's sixth-largest country by land mass, is the most sparsely populated developed nation with only 2.9 people per square kilometre (7.4 per square mile).