The Federal Opposition has announced it will scrap the Aboriginal and Torres Strait Islander Commission (ATSIC) if it wins government.

Labor would replace ATSIC and the executive agency, ATSIS, with a series of regional partnerships and a directly elected national organisation without funding control.

Opposition leader Mark Latham says the Howard Government has added to the failure of ATSIC through a lack of necessary reforms.

Mr Latham says he wants to make Indigenous governance a priority in Australia.

"ATSIC is no longer capable of addressing endemic problems in Indigenous communities, it's lost the confidence of much of its own constituency and the wider community," Mr Latham said.

"Unhappily the current model has not delivered sufficient gain to Indigenous communities, it's been very much damaged by leadership turmoil.

"I've publicly declared my lack of confidence in [suspended chairman] Geoff Clark."

Federal Indigenous Affairs Minister Amanda Vanstone has ridiculed Labor's announcement that it plans to scrap ATSIC.

Senator Vanstone has told the Senate that the Government is already working with states and territories on the issue.

She says Mr Latham has turned up to the debate two years too late.

"A new realisation that suddenly dawned on him - there's something wrong with ATSIC," she said. "Hold on mate, buddy, pal, where have you been?

"Announcing we'll have some consultation on this, again mate, buddy, pal, where have you been?"

Mr Latham says there will be consultation on exactly what will replace ATSIC and ATSIS.

"We're hoping through devolution, regional partnerships and community empowerment - a whole new model - we can produce better outcomes on the ground, better outcomes for communities in desperate need," Mr Latham said.

Labor will push to have the issue of Aboriginal affairs looked at collectively by all governments in Australia.

Mr Clarke has accused Labor of taking another swipe at Aboriginal affairs.

"If a body is appointed or set up that does not have that capacity to be able to both advocate nationally, internationally and locally, well then it would be something that would be detrimental," he said.

In other developments:

The Northern Territory's Chief Minister has refused to openly support Mark Latham's plans to abolish ATSIC but says she agrees with the Labor leader's general direction.

A senior health economist says the Reid report released yesterday has failed to properly acknowledge the grave state of Indigenous health in Western Australia.

The future of suspended Aboriginal and Torres Strait Islander Commission (ATSIC) chairman Geoff Clark is expected to be decided this week.