Anglicare Australia has released its plan going into the next Federal Budget with a call to close the gap for First Nations children.

To this end, Anglicare urged the federal government to fully implement the National Agreement on Closing the Gap to reduce the number of First Nations children in out-of-home care by 45 per cent by 2031.

While 53 per cent of Indigenous children in out-of-home care were placed with Indigenous carers in 2013, that figure had fallen to 40 per cent by 2021.

Anglicare Australia's executive director Kasy Chambers said one solution is for out-of-home care facilities to collaborate with Aboriginal organisations.

"What many Anglicares are doing is working to handover the programs that they've got to Aboriginal-owned organisations," she said.

"Some of the stuff we've done is to work with Elders, to bring in Elders as advisors to foster workers and placement workers to try and help keep those kids involved in their culture."

The removal of the activity test for Child Care Subsidy was also suggested by Anglicare Australia to make childcare more accessible for First Nations families.

Under the recent changes, there will be improved access with all First Nations children now eligible for 36 hours a fortnight.

Anglicare Australia's recommendation is to remove the bottom two steps of the activity test.

Ms Chambers said this Federal Budget has the potential to be one of great impact.

"This is the budget where we could end poverty," she said.

"We're very frightened that the government will enact stage three tax cuts, which will cost the budget $254 billion a year. And we've seen so many other things we can spend that money on."

The next federal budget is scheduled to be handed down in March.