The New South Wales government is failing to fund life-saving legal services amid "unprecedented" changes to the court system, the state's peak Indigenous legal service says.

The Aboriginal Legal Service NSW/ACT has sharply criticised the Labor government over reforms it says will create "delays, chaos and unjust outcomes for Aboriginal people".

The criticism follows the government's rollout of tough youth bail laws, which have already been condemned by legal and Indigenous advocates.

From July, anyone refused bail by police in regional NSW will have their case heard via a centralised 'virtual' bail court. According to ALS, this major shift is being implemented "without" any additional funding for the organisation to continue representing Aboriginal children and adults.

ALS chief executive Karly Warner said the absence of extra resources could leave nearly 40 Aboriginal people per day without access to culturally safe legal representation.

Predicting the outcome will be "chaotic, dangerous and unjust," Ms Warner said they are already seeing First Nations people "languishing in watch houses and prison cells waiting to make a bail application."

"The NSW government has now made changes to policy without considering the impact on Aboriginal people and the Aboriginal Legal Service," she said.

"To date, the Aboriginal Legal Service has not received the necessary investment from the NSW government to accompany legal system changes that disproportionately harm Aboriginal people, despite the life-saving support we provide to thousands of Aboriginal women, children and men each year."

Her comments follow revelations that one year after the introduction of the controversial youth bail laws, children are being held in custody for offences that wouldn't result in a jail sentence.

Figures from the Bureau of Crime Statistics and Research (BOCSAR) show a growing number of children and young people are being denied bail — a trend that contradicts recommendations from the 1991 Royal Commission into Aboriginal Deaths in Custody.

BOCSAR's March quarter statistics show the adult prison population in NSW reached 13,103, with 4,244 Aboriginal adults in custody. That figure represents 32 per cent of all prisoners — a 14 per cent increase since November 2023.

By comparison, the non-Indigenous prison population rose by just 4.3 per cent. BOCSAR attributed the surge to the growing number of people being held on remand.

Ms Warner said the government is aware of the resourcing ALS requires but continues to fall short.

"When it comes to investment in policy reform, it seems our clients are not a priority," she said.

"We are concerned that these court changes, coupled with recent policies and laws which are driving more Aboriginal and Torres Strait Islander people into contact with police and prisons than ever before, are being rolled out without any consideration of the investment needed for us to simply do our jobs."

The Palawa woman warned that if the government continues to "neglect" ALS services, it would represent a "devastating step backwards" for Aboriginal people in regional NSW.

"This is a critical point where the Attorney-General has the opportunity to make a sensible decision – one that will impact nearly 300 Aboriginal adults a week – and commit to the government's obligations under Closing the Gap," Ms Warner said.

Her concerns come amid rare public comments from NSW Chief Justice Andrew Bell, who last month raised alarm about the rising number of people being held on remand.

Acknowledging that "decisions to grant or refuse bail are regularly the subject of media coverage," Chief Justice Bell defended judicial discretion, saying the justice system must balance public expectations with the presumption of innocence.

"Our criminal justice system takes as its starting point the fundamental proposition that an accused person is innocent until proven guilty and, generally speaking, should not be deprived of his or her liberty unless and until found guilty by a judge or a jury," he said.

Meanwhile, the Minns government has announced plans to expand court capacity in Sydney.

The Downing Centre and John Maddison Tower will undergo refurbishment to create at least 15 new courtrooms, with 10 additional virtual courts and enhanced audio-visual facilities to support remote bail hearings. The Office of the Director of Public Prosecutions will also receive $48.3 million to hire more solicitors.