The Aboriginal and Torres Strait Islander Commission (ATSIC) will be abolished.

Prime Minister John Howard says federal Cabinet agreed to axe ATSIC after a submission from Aboriginal Affairs Minister Amanda Vanstone today.

"We believe very strongly that the experiment in separate representation, elected representation for Indigenous people has been a failure," Mr Howard said.

Mr Howard says a combination of reasons led Cabinet to make the decision.

"I do believe that (ATSIC) has become too preoccupied with what loosely may be called symbolic issues and too little concerned with delivering real outcomes for Indigenous people," he said.

"That is not to say that there is not room for debate on symbolic issues, they are important, different people have different views on them, and I respect those differences."

The Opposition is likely to support the move, with leader Mark Latham indicating Labor would replace the commission with another Indigenous body.

But the Prime Minister says ATSIC will not be replaced with an alternative body.

"We will appoint a group of distinguished Indigenous people to advise the Government, on a purely advisory basis, in relation to Aboriginal affairs."

Mr Howard insists Indigenous people will be better off.

"This will not result in less money for Indigenous affairs," he said.

"It will, in fact, result in more resources being focused on challenging areas of Indigenous need."

Mr Howard says legislation will be introduced in Parliament to abolish ATSIC next month.

Acting chairman unimpressed

Acting ATSIC chairman Lionel Quartermaine says the commission has not been a failure and has expressed his disappointment at the decision.

"When are the politicans of this country, Labor as well as the Coalition, going to come under a bipartisan agreement to work with and to improve Aboriginal people's wellbeing?" he said.

"I thought they were leaders."

Suspended ATSIC chairman Geoff Clark has expressed his disgust at the organisation's demise.

Mr Clark says the decision will further disadvantage Aboriginies.

"There'll be just lack of service, there'll be absolute chaos, the amount of Aboriginal people that will fall on the unemployment list," he said.

"The fact is most of those resources go to rural Australia and is administered and spent in rural townships, and where Aboriginal populations are centred you'll see a decline in the resources."

Mr Clark, who is currently fighting his suspension through the Federal Court, says the decision sends the wrong message.

"Why are we tearing down the very democratic processes, particularly when the Prime Minister says we're all equal and we should be mainstream and we're all one?" he said.

"Why are we not entitled to a democratic process to hear our visions and to hear our complaints and our solutions as to what it is that's important to Aboriginal people?"

But the CLP member for the Darwin seat of Solomon David Tollner has welcomed the decision.

"No it's not a shock to me," he said. "I think it's something that's been brewing for quite some time and I think sooner or later the Government had to step in and do this."

And former Northern Territory Labor senator Bob Collins says Mr Clark must shoulder a large part of the blame.

"What really disappoints me is that the chairman, right up until this day, refuses to acknowledge any responsibility whatsoever on his own part for the contribution to the demise of ATSIC, which I just think is very sad," he said.

"He does have to bear a lot of the blame."

In other developments:

Indigenous groups say it is no surprise the Federal Government has moved to abolish the Aboriginal and Torres Strait Islander Commission (ATSIC).