New veteran compensation claims are being dealt with in a two-week period, with the backlog on track to be cleared by a key deadline set by a royal commission.
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The Royal Commission into Defence and Veteran Suicide called for the massive logjam to be sorted by the end of March.
The backlog includes any claim submitted to the Department of Veterans' Affairs, regardless of how old it is.
But a new model the department is moving to means all fresh claims will be allocated to an officer for processing within a fortnight of having been lodged.
The latest data from the department shows as of January, the total number of claims yet to be dealt with has plummeted to about 3690.
At its peak in late 2022, there were 45,000 claims waiting in the queue.
Veterans' Affairs Minister Matt Keogh said the government's investment in 500 additional processing staff meant the backlog would be sorted ahead of schedule.
"Eliminating the claims backlog is a huge step in the right direction and the staff in DVA are to be commended for their tireless work," he said.
The claims workforce continued to work on processing veterans' claims as quickly as possible, the minister said.
Last November, a record 9800 claims were finalised.
The department is also set to clear permanent impairment matters before the end of February, with 3130 outstanding claims.
Long processing times for claims has been identified by the royal commission as harmful for the mental health of veterans and their loved ones.
Labor has invested $233.9 million over four years to hire the extra workers in a bid to bolster the claims processing workforce.
Australian Associated Press
