Prime Minister John Howard has questioned whether the Aboriginal and Torres Strait Islander Commission (ATSIC) should continue to exist, after it spent $85,000 covering the legal costs of its suspended chairman, Geoff Clark.

Federal Indigenous Affairs Minister Amanda Vanstone has condemned the decision, saying it is an astonishing waste of taxpayers' money which should be spent helping disadvantaged Aborigines.

Mr Howard says it is not a decision the Government can overturn but has told Southern Cross radio he is not satisfied with ATSIC's performance.

"I don't think ATSIC overall has been of assistance to Indigenous people," Mr Howard said.

"I have all the reservations in the world now about the whole notion of a separate body like ATSIC - certainly [one] making a whole lot of executive decisions and controlling budgets.

"There could be an advisory role but I have a lot of reservations."

In other developments:

In his final report on Indigenous policy, social justice commissioner Bill Jonas has labelled the Federal Government's "practical" approach to reconciliation a failure.

The Australian Democrats' spokesman on Indigenous affairs, Aden Ridgeway, says the Federal Government must abandon its approach to reconciliation after a new report found it was failing.

Aboriginal and Torres Strait Islander Commission (ATSIC) central zone commissioner Alison Anderson says the Federal Government is too gutless to decide whether to sack or reinstate suspended chairman Geoff Clark.

Aboriginal and Torres Strait Islander Commission (ATSIC) Northern Zone commissioner Kim Hill says he does not support the board's decision to pay for Geoff Clarks' legal challenge to his suspension as the organisation's chairman.

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.

Aboriginal and Torres Strait Islander Commission (ATSIC) Northern Zone commissioner Kim Hill says the present funding arrangement set up by the Federal Government means Aboriginal communities cannot plan their future.

Suspended Aboriginal and Torres Strait Islander Commission (ATSIC) chairman Geoff Clark has won the right to appeal against a court decision allowing a woman to sue him over rape allegations.