Australians are living longer but lifestyle-related chronic diseases are taking an increasing toll, according to the latest report on the nation's health.

The report, issued every two years by the Australian Institute of Health and Welfare (AIHW), has found Australians are now living an average of 25 years longer than they were a century ago.

A boy born today can expect to live to 79.9 years old, a girl to 84 years.

But Australians are increasingly living with chronic diseases as a result of an ageing population as well as lifestyle and health habits.

AIHW director and chief executive David Kalisch said chronic diseases were often labelled "Australia's greatest health challenge".

Key health findings: Chronic disease leading cause of illness, disability and death - accounting for 90 per cent of all deaths in 2011.

Chronic disease leading cause of illness, disability and death - accounting for 90 per cent of all deaths in 2011. More than 3 in 5 adults (63 per cent) are overweight or obese (70 per cent of men, 56 per cent of women)

More than 3 in 5 adults (63 per cent) are overweight or obese (70 per cent of men, 56 per cent of women) Nearly 3 in 5 adults (57 per cent) do not exercise enough

Nearly 3 in 5 adults (57 per cent) do not exercise enough Only 8 per cent of adults eat enough vegetables

Only 8 per cent of adults eat enough vegetables Only 49 per cent of adults eat enough fruit

Only 49 per cent of adults eat enough fruit 20 per cent of adults (3.2 million) have experienced mental disorder in past 12 months

20 per cent of adults (3.2 million) have experienced mental disorder in past 12 months About 45 per cent of adults will be affected by a mental disorder in their lifetime

About 45 per cent of adults will be affected by a mental disorder in their lifetime 1 in 10 Australians aged 65 and over have dementia

1 in 10 Australians aged 65 and over have dementia Nearly 15 per cent of Australians have used illicit drugs in the past 12 months

Nearly 15 per cent of Australians have used illicit drugs in the past 12 months Nearly 1 in 5 adults (19.5 per cent) drink more than two standard alcoholic drinks per day AIHW: Australia's Health 2014

"While not solely related to behavioural factors in all cases, they can be heavily linked to smoking, physical inactivity, poor nutrition and the harmful use of alcohol," he said.

"This can lead to obesity, high blood pressure and high cholesterol, which in turn can lead to cardiovascular disease, diabetes, cancer and mental health issues."

Three in five adults are overweight, almost 60 per cent do not exercise enough and only 8 per cent are eating enough vegetables, the report found.

Chronic diseases continue to be the leading cause of illness, disability and death, accounting for 90 per cent of all deaths in 2011.

Many people have more than one chronic disease, which increases with age.

On the positive side, the report found smoking rates continue to fall, vaccination rates are going up as is the cancer survival rate.

There has also been a 20 per cent fall in heart attacks and a 25 per cent drop in strokes.

Health issues at different stages of life

The report also focused on the health of people as they age.

"While cancer in children is relatively rare, the survival rate for five years after diagnosis has improved pretty dramatically from 68 per cent to 81 per cent over a 10 year period," Dr Kalisch said.

"We've also noticed that after about age 45 you start to see more people dying from coronary heart disease and lung cancer."

For people aged 25-44 the top two causes of death for men in 2011 were suicide and accidental poisoning, while for women they were suicide and breast cancer.

The most common long-term health conditions affecting older Australians aged 65 and over were arthritis, high blood pressure and hearing loss.

Indigenous health problems

The death rate from circulatory and respiratory disease has fallen among Indigenous Australians.

Infant mortality rates are also down and fewer Indigenous people are smoking.

But Indigenous Australians are seven times more likely to develop kidney disease, three times more likely to have diabetes, are more likely to be obese and have a greater chance of dying from cancer, compared to non-Indigenous Australians.

Health costs rising faster than inflation

Dr Kalisch said the cost of health care was continuing to rise faster than inflation.

"They have risen faster than inflation and the economy as a whole for many years, and in recent years have outpaced government revenues from taxation and other sources," he said.

"We find that health spending is taking up a greater proportion of government revenue than it used to.

"[It was] 26 per cent in 2011-12, or 6 percentage points higher than before the Global Financial Crisis."

The four most costly disease groups (cardiovascular disease, oral health, mental disorders and musculoskeletal) had direct health care costs of $27 billion in 2008-2009, or 36 per cent of the total health expenditure.

The report has been tabled in both the House of Representatives and the Senate.