Queensland Aboriginal and Torres Strait Islander Commission (ATSIC) head Ray Robinson is urging Aborigines and Torres Strait Islanders not to panic over a plan by Federal Labor to dump the body.

Federal Opposition Leader Mark Latham says he will replace ATSIC and its sister agency, Aboriginal and Torres Strait Islander Services (ATSIS), with a new peak Indigenous body.

Commissioner Robinson says Mr Latham's proposal has merit and is remarkably close to a model already supported by the current board of ATSIC Commissioners.

He is encouraging Indigenous Australians to keep an open mind.

"I tell everyone out there in the Indigenous community look at what the Labor Party is proposing here and let's workshop it, because at the moment this ATSIS is a total disaster," he said.

"It has put grant controllers, service providers into organisations all over Australia and wasted millions and millions of dollars that could of went out there to grassroots people."

Commissioner Robinson says Mr Latham's proposal is surprisingly close to one developed by the current board of ATSIC Commissioners.

He says the Howard Government has destroyed ATSIC and its credibility and it is time to rebuild.

"You know you might change the name, you might give it a different shape and a different colour, but I think the Labor Party is on the right track," he said.

"All we want is a clear understanding from the Labor Party that they will consult directly with the elected arm."

He says ATSIC has been paralysed, stripped of funding and kicked around like a political football since the Howard Government came into office.

"The Labor Party is giving us an offer and if we can get the outcomes we want to get, then I think it will benefit Indigenous Australian's," he said.

"Indigenous Australians can go forward not backwards like we are going with this Government.

"This suggestion of [Federal Opposition leader] Mark Latham has got more merit in it than we have heard anyone in the last 11 years and is along the lines of what we have been saying all along," he said.

The government is expected to announce its own plan for the future of ATSIC within weeks.