Australia's fourth largest bank, ANZ, announced a relief package on Friday to help embattled dairy farmers.

It came following drastic cuts to milk prices by Australia's two largest dairy companies, Murray Goulburn and Fonterra, sparking fears many local dairy producers in Australia could go broke.

ANZ general manager of regional business banking Christine Linden said falling farm-gate dairy prices were putting significant stress on some dairy producers.

"While the macro fundamentals in the medium and longer-term of the industry remain strong, we know many of our customers are doing it tough at the moment," Linden said.

"We're encouraging our dairy customers to get in touch with us so we can provide support and work with them on the best possible solutions to meet their needs."

Some measures to be introduced by ANZ include suspending repayments on loans, including credit cards, for up to three months.

"Every farm has a different cost structure and unique characteristics. We're committed to working with each customer to respond to the current challenges so they can take advantage of the long-term benefits of the dairy industry."

Australian Prime Minister Malcolm Turnbull acknowledged on Friday the drop in milk prices was having a "very harsh impact" on dairy farmers and would ask the opposition for assistance with the matter.