More than 70,000 foreign troops, including British soldiers, are engaged in a long-running struggle to put down an armed Taliban campaign that is now beginning to encroach on formerly safe areas close to Kabul, the capital.
"In the future we will put more resources into the training and mentoring of the Afghan army," Brown said.
Military leaders say that while international troops can help battle the Taliban, the long-term key to security is strengthening the Afghan security forces.
Earlier this month, Robert Gates, the US defence secretary, endorsed a $17 billion plan to double the size of the Afghan army over five years.
Brown said the $120m would go to an internationally administered trust fund that channels aid to the Afghan government.
The money would be used to pay teachers' salaries and fund development work, especially healthcare.
|The Afghan army needs more troops
to combat a resurgent Taliban [EPA]
Brown's visit comes at a time of heightened tension between Afghanistan and Pakistan, with Afghan leaders accusing their neighbour of allowing the Taliban to launch cross-border attacks, a charge Islamabad denies.
The border between Afghanistan and Pakistan is a haven for al-Qaeda-backed Taliban fighters, who have stepped up their bombing campaign in Afghanistan this year to remove Karzai's pro-Western government and drive out foreign troops.
"We emphasised the importance of better co-operation between the two countries particularly in dealing with the insurgents that are coming across the border from Pakistan to Afghanistan," Brown said.
"Pakistan and the problem of terrorism there, and coming from there, is something that has to be raised with the Pakistani government, and I will continue to do so," he said.
Britain has 8,400 troops in Afghanistan, which Brown said were being "reconfigured" to include more secondments to the Afghan army and to tackle the new Taliban tactics.
Ten French soldiers were killed on Tuesday in an ambush by Taliban militants in a volatile area east of Kabul and Brown said the British army should brace itself for more casualties.
A Taliban attack also killed three Canadian soldiers in southern Afghanistan on Thursday.
Nearly 120 British soldiers have been killed in Afghanistan since they joined the US-led invasion of the country in late 2001.
Brown, who earlier met British troops at a base in the southern province of Helmand, also said he would stress to Karzai the need to root out corruption in his administration.
"Sort out the government so that we have a full attack on corruption, (so that) we deal with the problem of narcotics," Brown said when asked what his message would be to Karzai.
Frustration is growing among many Afghans and foreign leaders over rampant corruption and a booming heroin trade.
Brown said a lot of foreign aid was going into the country: "We want to see on the ground the delivery of the results."