Victoria's leading Indigenous legal organisation has called on the state government to create a youth justice system focused on giving children the opportunity for a better life.

It comes as the Youth Justice Bill, which will see the age of criminal responsibility raised to 12-years-of-age, passed the upper house in parliament on Friday morning, with the Greens securing an amendment to ban the use of spit hoods on young people in Victorian prisons.

The Victorian Aboriginal Legal Service (VALS), who led the criticism of the government's abandonment of their plan to raise the age to 14 by 2027 last week, said whilst the new bill was a "long way short of what we envisaged," there were still some benefits to helping Indigenous children stay out of the justice system.

These included the raising of the age from 10- to 12-years-of-age, codifying doli incapax (a presumption that children under 14 years old are incapable of criminal intent) and improvements to warnings, cautions and diversions.

"Our children deserve to be safe and have the support they need to live a good life, connected to culture, community, and Country," VALS chief executive Nerita Waight said.

"The Youth Justice Act will be a small step towards a better youth justice system, but it will require significant investment in community services and bigger reforms in the near future."

She said VALS were still hopeful the age would be raised to 14 and called for more funding for the only dedicated Indigenous child legal service in Victoria —Balit Ngulu.

"While the Victorian Government abandoned its commitment to raising the minimum age of criminal responsibility to 14 years old and wound back their own bail reforms – Aboriginal communities will not be deterred," Ms Waight said.

"We will keep doing the work to ensure these reforms happen sooner rather than later."

During the debate in the upper house which went until 2am on Friday, more than 200 amendments to the bill were put forward by the government, the opposition and crossbench MPs.

The banning of spit hoods, proposed by the Greens, was secured with support from the government, the Legalise Cannabis party and the Animal Justice party.

Whilst youth facilities in Victoria do not use spit hoods, they have been used on youth offenders in adult prisons.

Last year Victoria's Commission for Children and Young People (CCYP) highlighted the case of a 17-year-old Aboriginal teenager being subject to a spit hood, despite no previous spitting incidents, in an adult facility.

The child was kept in "effective isolation for a total of 24 weeks out of eight months," with the Greens securing amendments to the bill to require the government to report on the number of times isolation is used in youth detention and the number of strip-searches conducted.

An amendment to ban the use of isolation in its entirety failed.

"The positive measures in this bill are the result of powerful and committed advocacy by First Nations, legal and human rights groups and the Greens are proud to back their efforts," the Greens' Justice spokesperson, Katherine Copsey, said.

"The age of criminal responsibility has been lifted to 12 as a first step, and we need to see measures that divert children from the criminal justice system because this is what we know is best for children and for community safety."

VALS said another positive of the bill was steps towards Aboriginal self-determination, but said they were "very angry" at the "racist and divisive" attacks by the opposition on the matter.

"The Liberal and National parties need to meet with Aboriginal communities and explain why they are actively taking racist positions on a series of policies, including the Youth Justice Bill, cultural heritage laws and Treaty," Ms Waight said.

"It is particularly hurtful when they target our children. If they want to talk about us, they should talk to us first."

Despite a significant swathe of medical evidence, the opposition have criticised raising the age above ten, arguing the new bill was giving youth offenders "unlimited get-out-of-jail-free cards".

"The Allan Labor Government is more interested in ideology than community safety and under Labor's weak bail laws, the vicious cycle of offend, release and re-offended will only continue," Shadow Attorney-General Michael O'Brien said.

Shadow Police Minister, Brad Battin, said: "The Bill sends a message that crime is okay and the removal of powers to get young offenders on the right path will only see more Victorians harmed and the cycle of crime continue."