She will appear alongside Tom Hardy and Charlize Theron in Mad Max: Fury Road, according to Australia's Daily Telegraph.
"Obviously it's set in a post-apocalyptic world, and women, especially beautiful women, are scarce, so men have been locking them up in cages," said a source. "Abbey is one of them. She's perfect."
The film has suffered numerous delays over the years, most recently due to poor weather conditions in 2011.
Nicholas Hoult, Zoë Kravitz, Riley Keough, Adelaide Clemens and Hugh Keays-Byrne have all been linked to the project, but it remains unclear if they will still appear in the film.
Teresa Palmer will be replaced by Kershaw, the former deciding to depart the movie following the long delays.
Miller has said that Mad Max: Fury Road will follow along the same lines as Mel Gibson's abandoned 2003 effort.
> 'Mad Max 4' originally intended for anaglyph 3D, says George Miller
> Miller: 'Mad Max 4 will start in 2012'
Watch George Miller speaking to Digital Spy about Mad Max: Fury Road below: