In addition to farm-bred dogs, considered a delicacy in South Korea, dogs raised in houses would also be slaughtered.
South Korea plans to kill 236,000 chickens and destroy six million eggs.
The virus in humans has been traced to contact with infected birds but experts fear the virus could mutate into a species-jumping form which could trigger a human pandemic.
The 2003 outbreak of bird flu claimed more than 150 lives worldwide and ravaged Asia's poultry industry.
The 35 year-old Indonesian woman was confirmed dead after undergoing treatment for bird flu infection for almost three weeks.
A Jakarta hospital spokesman said health officials were trying to determine the source of her infection.
Runizar Roesin, of the national Bird Flu Information Centre, confirmed the woman from the city of Tangerang in the outskirts of the Indonesian capital as the country's 57th victim.