States and territories have so far relied on PCR - polymerase chain reaction - tests that detect specific genetic material, and are more accurate than RATs.
But the increased transmissibility of the Omicron variant of the virus is causing testing lines to stretch for hours, with results being returned up to four days later.
People who need PCR tests to travel have added to the rising demand.
Chief Medical Officer Paul Kelly said the potential long turnaround time of PCR tests impact their usefulness.
"If you have to wait for eight hours in a queue, and then 72 to 96 hours to get a result, it's not fulfilling any useful public health function and it's delaying proper clinical care," he said.
Prime Minister Scott Morrison will take a new proposal to state and territory leaders at Thursday's national cabinet meeting, outlining his intention to pivot towards RATs.
Changes to how close contacts are handled would mean a seven-day quarantine period which could end if the person gets a negative RAT on day six. A second RAT would be taken on day 12.
Tests involve taking a swab from the throat or nose, or sometimes saliva. They take 10 to 20 minutes to produce a result.
RATs can be purchased online or at pharmacies and cost about $15 each.
Positive RAT results should be confirmed by a PCR test, as the former are considered less reliable and can produce false positives.
The RATs work better on symptomatic people because they are more effective at detecting high viral loads.
Repeated tests also increase the likelihood of catching a positive case.
The Victorian health department says while RATs are not as accurate, they "are likely to find most COVID-19 cases in people with symptoms".
It is also safe for children to take a RAT but those under 12 will need a parent or guardian to perform the test on them, the department says.
The Therapeutic Goods Administration - which is responsible for regulating medicine and medical devices in Australia - has approved 15 types of at-home rapid tests.
The tests are put into three categories: acceptable sensitivity, high sensitivity and very high sensitivity, based on the positive percentage each test achieved from a case confirmed by a PCR test.
The threshold for each category is 80 per cent, 90 per cent, and 95 per cent respectively.
The five very high sensitivity tests are the All Test nasal swab, the LYHER nasal swab, the OnSite nasal swab, the Panbio nasal swab and the V-Chek saliva test.
There are calls to make the tests free, with Labor leader Anthony Albanese saying on Wednesday "it is easier to get a ticket to the AFL Grand Final than it is to get a test in some parts of Australia".
Both NSW and Victoria have already ordered millions of the tests and promised to provide them for free, but they will not be available until the end of January.
Mr Morrison said he was in discussions about concessional access to RATs but there needed to be a clear definition about who would be eligible.
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