Prime Minister Anthony Albanese has walked away from his previous commitment to implement a Makarrata commission or institution, saying his government must find a new way to engage with Indigenous communities to help close the gap.

Named after a Yolŋu word for coming together after a struggle, Makarrata is the culmination of the Uluru Statement from the Heart, but the PM said the federal government will not create a national commission to lead "truth-telling" about First Nations history.

Mr Albanese promised to enact the statement in full on the night of his election victory in 2022 but has seemingly been turned by the referendum loss last year - a result he stressed he accepted - and consistent political attacks from the opposition.

He told the ABC's Insiders program on Sunday that talking to Indigenous organisations - including land councils, was the best way to engage with First Nations people, as opposed to setting up a formal commission to oversee agreements and truth-telling.

"That's not what we have proposed," he said. "What we've proposed is Makarrata just being the idea of coming together."

Labor placed the Makarrata commission as part of its costed policy platform before the federal election and $5.8 million was budgeted to its establishment in the Albanese government's first budget.

Our commitment to a better future for First Nations people is as strong as ever.

We can close the gap. And we must.

Our commitment to a better future for First Nations people is as strong as ever.

We can close the gap. And we must.

We're building more remote housing, helping communities get the health care they need, and fully funding NT public schools. pic.twitter.com/acJ9jPrmYR

— Anthony Albanese (@AlboMP) August 3, 2024

Speaking on the same program at the Garma festival last year in the lead up to the referendum, the PM said the funding was about "establishing a structure [for the commission], which will happen".

However, over the weekend he argued he hadn't changed his position, stating: "Makarrata [is] a Yolŋu word that simply means coming together after a struggle. I'm somewhat perplexed at why people see that as being complex."

The ABC reported Yes campaign director during the referendum, Dean Parkin, said the Uluru Statement was clear that Makarrata was about a commission.

"That was the election night commitment, it was to the full implementation of the Uluru Statement from the Heart and [it] is very, very clear on that point," Mr Parkin said.

"The Uluru Statement from the Heart is very, very clear on that point, that it is a Makarrata commission. So it's a high expectation, because that commitment was made in good faith."

Newly appointed Aboriginal and Torres Strait Islander justice commissioner, Katie Kiss, told the ABC a Makarrata commission was a necessary step and needed to be much more than "fuzzy language about coming together".

"Makarrata is about coming together, but also about the rules of engagement and how we work in partnership to achieve the practical outcomes that people keep saying they want to achieve," Commissioner Kiss said.

The Australian reported Uluru Dialogue co-chair Pat Anderson said the PM's comments at Garma were confusing and asked if he was "rolling back on the Labor election commitment to the Makarrata commission?"

"The Makarrata called for in the Uluru Statement is a bricks-and-mortar body and it was a clear election promise," Ms Anderson said.

She previously had urged the government to support the Greens' bill, which would facilitate the establishment of a truth and justice commission.

Opposition leader Peter Dutton, who didn't go to the Garma festival this year, arguing "it is not going to deliver the practical outcomes," said there would be "no Makarrata and there will be no revisiting of truth-telling" under a government he leads.

"I want kids to go to school. I want them to come home to safe households. I want women not to be subject to domestic violence. I want to make sure that we have a health system that improves infant mortality, that extends the life of Indigenous Australians," he said.

Mr Dutton argued he wants to be a PM "who can deliver practically for Indigenous Australians, so that we can help improve their lives," however he didn't outline how truth-telling and Indigenous-led responses were not practical solutions.

Indigenous organisations have long-called for more consultation and Indigenous-led response to help close the gap, which was revealed to be worsening in several key metrics last week.

Many organisations cited the positive outcomes in the data as a sign that work by Aboriginal community-controlled organisations (ACCOs) was succeeding and needed more practical support.

However opposition Indigenous spokesperson Jacinta Nampijinpa Price has previously rejected the idea of self-determination and Indigenous-led responses to Closing the Gap championed by ACCOs and the Productivity Commission, arguing that "we should stop treating Australians on the basis of race and start treating the need".