The Aboriginal and Torres Strait Islander Commission (ATSIC) will launch a High Court challenge to the Federal Government's decision to establish a seperate body to deliver services to Indigenous people.

Federal Indigenous Affairs Minister Senator Amanda Vanstone says the Government established Aboriginal and Torres Strait Islander Services (ATSIS) nine months ago to separate the funding and advisory arms of the peak Indigenous body.

Senator Vanstone told the Senate's Question Time on Thursday if ATSIC thought the new funding body was illegal it should have mounted a challenge at the time.

"I've written to ATSIC today asking for the initial legal advice they sought on this matter, and the rumour mill has it that the initial advice that ATSIC received said the Government was on 100 per cent rock solid ground," Senator Vanstone said.