As recently as last month, Webb lamented the tournament she has won a record seven times, which will run from February 1-3 at Royal Pines on the Gold Coast, was battling tough financial times.
Webb was disappointed at government funding cuts which have reduced the Masters to a three-round event, admitting the shortened format would force participants to take a different mindset into the tournament.
"We have played three-round tournaments at the Ladies Masters before when torrential rain caused cancellation of the first round," Webb said in a statement.
"However this is a little different, we are going in knowing it is three rounds.
"It means you have to be on your game from the start, a quick start is important."
But it hasn't stopped the world golf hall of famer signing on to chase an eighth Masters title.
"I am very pleased that I am returning to Royal Pines where I have so many great memories in the past," Webb said.
"My nieces and nephews will be joining me so I look forward to some good golf and time on the beach on the beautiful Gold Coast and all that it has to offer."
Tournament chairman Bob Tuohy said Webb's decision made a huge statement of her commitment to the tournament and women's golf in Australia.