More than half of Aboriginal and Torres Strait Islander children in out-of-home care were placed with non-Indigenous families in the past year - the highest proportion in 20 years.
A new report from Family Matters found Indigenous kids are 10 times more likely to be in state care, with 40 per cent living with Indigenous families.
The report found of the $7.5 million spent on Indigenous child protection in 2021/22, only 18 per cent was spent on family support services.
"Child protection systems are focused on surveillance and intervention rather than investing in effective, culturally safe supports for families in need," Family Matters co-chair Paul Gray said.
Dr Gray said 25 years after tabling the Bringing Them Home report it was unacceptable that Aboriginal and Torres Strait Islander children continued to be removed from their families at increasing rates.
Indigenous children make up 42 per cent of total children in state care, but only five per cent of children nationally.
However, when they were supported by Aboriginal organisations, the report found better outcomes.
"What we aren't seeing is transformative action and the resourcing of significant commitments that have been made at a federal, state and territory level," national body for Aboriginal and Torres Strait Islander child services (SNAICC) CEO Catherine Liddle said.
The National Framework for Protecting Australia's Children 2021-2031 also offers a way forward.
"For the first time we have a framework for protecting children that was designed with us, where we had a say," Ms Liddle said
"But for this to work the commitments that have been made have to be funded with an emphasis on prevention and early intervention.
"Our children and families cannot continue to pay the heavy price of government inaction."
