An increasing number of older people are participating in Australia's labour force, fresh data shows.

According to the Australian Bureau of Statistics social trends data, in 2009-10, there were about 5.5 million Australians aged 55 years and above making up one quarter of the population, and around a third of them were participating in the labour force.

People aged 55 years and over made up 16 per cent of the total labour force, up from around 10 per cent three decades earlier. The participation rate of Australians aged 55 and over has climbed from 25 to 34 per cent over the past 30 years, with most of the increase occurring in the past decade, the report said.

Getting more older Australians to work is seen as one way to help soften the economic impacts of an ageing population. Over the past decade, successive Australian governments have recognised this and developed policies aimed at boosting participation among older workers by encouraging them to stay in the workforce longer or re-enter the workforce.

Strong economic growth and legislative incentives were the main drivers for the marked increase in labour force participation among older men and women over the past 10 years, the report said.

"Increased flexibility in employment arrangements in recent years may have enabled older workers to switch to part-time work as a transition to retirement. However, there have also been legislative changes designed to encourage older workers to continue in the workforce. These include tax concessions for workers aged 55 years and over, for women, and an increase in the age at which they are eligible for the age pension."