A new review has recommended the federal government needs to explore ways to better support Indigenous education and care services.

The review of the Community Child Care Fund Restricted (CCCFR) Grant also found the program should be revised to better align with the national agreement on closing the gap priority reforms, including a focus on self-determination and building up the community-controlled sector.

SNAICC – National Voice for our Children chief executive, Catherine Liddle, said the report acknowledged the role of Aboriginal Community-Controlled Organisations (ACCOs) in supporting First Nations children's access to early childhood education and care (ECEC).

She said there was a need for the government to better fund and support these services.

"Many of the Aboriginal and Torres Strait Islander services funded by the CCCFR grant operate in remote communities where there are significant barriers to providing ECEC and where the benefits for accessing early childhood services will produce the greatest benefit," Ms Liddle said.

"ACCOs go beyond the mainstream approach to childcare, offering connection, accountability and providing holistic wrap-around support for children and extended families because that's what's needed in these communities."

The CCCFR Grant aims to improve the early childhood outcomes for vulnerable children as well as increasing the participation in the workforce of vulnerable and disadvantaged families.

The review, commissioned by the Australian Government Department of Education into the CCCFR's non-competitive grant funding arrangements, found few CCCFR services would be viable if they operated on mainstream childcare funding alone.

It also found First Nations families and communities don't feel the current grant is sufficient to support developmental outcomes, as well as addressing the barriers to ECEC participation.

Furthermore, an alternate funding model - designed in partnership with Aboriginal and Torres Strait Islander representatives - should be considered for ACCO early years services.

"Despite consistently showing increased engagement among Aboriginal and Torres Strait Islander families, ACCOs do not receive the funding they need to operate sustainably," Ms Liddle said.

Ms Liddle said she was pleased to see the government commit to a further two years of funding for CCCFR services, which provides certainty for ACCOs funded under the grant.

"The government needs to commit to meaningful reform of the ECEC sector by implementing the recommendations of the Productivity Commission's Inquiry Report 'A path to universal early childhood education and care'," she said.

"Now is the time for large-scale ECEC reform. Governments should commit to implementing a dedicated funding model for ACCO early years services that ensures their sustainability."