Wednesday's offer sweetens BHP Billiton's initial proposal made last year of three of its shares for every Rio share, with the company now offering 3.4 shares for every Rio share.
Melbourne-based BHP needs at least 50 per cent of holders of both Rio's Australian and London shares to accept the deal for it to go through.
The earlier offer was rejected by Rio Tinto, saying the three-for-one bid undervalued the company's growth potential in the booming China-driven resources market.
The proposed deal has caused worries in China which has voiced concern about consolidation in an industry it relies on for the much of the raw materials it needs to feed its booming economy.
Last Friday Chinese state-owned aluminium giant Chinalco, acting with US-based Alcoa Inc, bought 12 per cent of Rio Tinto's London-listed shares for $14bn.
|BHP says the merger would benefit both |
companies' mining operations [GALLO/GETTY]
The share buy-up - reportedly the largest overseas investment ever made by a Chinese enterprise - was seen by analysts as a possible pre-emptive strike to prevent or at least complicate a possible BHP takeover.
China's largest steel company, Baosteel, has called on the Australian government to prevent any merger between BHP and Rio Tinto.
Commenting on BHP's revised bid, Paul Skinner, the chairman of Rio Tinto, said the company was assessing the offer and advised shareholders not to take any immediate action.
Rio Tinto has long opposed BHP's merger overtures, arguing it was better off as an independent company, digging its own iron ore mines and churning out hundreds of thousands of tonnes of copper, zinc and aluminium.
"The boards of Rio Tinto will consider the terms of the proposal carefully in the light of all circumstances and will make a further statement once they have completed this assessment," Skinner said in a statement.
"In the meantime, the boards encourage shareholders not to take any action."