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.

The Government formed the Aboriginal and Torres Straight Islander Services (ATSIS) nine months ago as an interim measure to distribute funds instead of ATSIC.

ATSIC is mounting a High Court challenge against the Federal Government saying it has been illegally stripped of control of its own funding.

Mr Hill says the ATSIC board was not given enough time to respond to the changes and that rural and remote communities are suffering.

He says the ATSIC board only had three months to assess the repercussions of the change.

"The transition by the Government in regards to the appropriation of funds was done on July 1 and the board only had two meetings leading up to the transition," he said.