The Federal Government's move to financially assist Indigenous Australians affected by the collapse of the Youpla Group in March of this year has been welcomed by a key advocacy group.

Payments will be provided to families of deceased Youpla Group policy holders who had an active policy as at April 1, 2020, with an expected 500 beneficiaries eligible for payments typically worth around $8000.

Members of advocacy group Save Sorry Business Coalition have supported the move, labelling it a "first step towards a resolution."

Financial Counselling Australia financial capability coordinator Lynda Edwards said the government's assistance was a step in the right direction.

"We warmly welcome the Federal Government's commitment as a first step towards a resolution for Youpla customers who have passed away", the Wangkumara and Barkandji woman said.

"These are First Nations people who were simply trying to do the right thing by their families and community."

Boandik woman Bettina Cooper reiterated Ms Edwards comments, but said more action was required to compensate families culturally, emotional and financially affected by the collapse of Youpla.

"We recognise and appreciate the willingness of the Federal Government to listen and consult with First Nations people on this issue", she said.

"We look forward to further conversations around a fair resolution for the remaining policyholders who were exploited by Youpla and let down by repeated regulatory failures.

"There is a lot more work to be done before the tens of thousands of First Nations peoples harmed by Youpla can heal from decades of cultural and financial harm."

In a joint-statement, Federal Indigenous Australians Minister Linda Burney and Financial Services Minister Stephen Jones acknowledged Youpla's collapse had greatly impacted First Nations Australians participating in sorry business.

"Sorry Business is of the deepest cultural importance to First Nations people", they said.

"It is vital that traditional mourning practises be allowed to continue despite the collapse of the Youpla Group funeral contribution funds earlier this year.

"Our first priority today is simply to limit the immediate cultural damage and community grief Youpla Group's liquidation has precipitated."

Mob Strong Debt Help Aboriginal solicitor Mark Holden praised the Federal Government's attitude towards supporting Youpla group victims.

"Previous successive governments failed to offer any meaningful assistance, and the last government suggested that First Nations elders could have a pauper's funeral, which was culturally devastating", he said.

"We look forward to working with the Federal Government to assist all remaining policyholders to avoid further trauma and intergenerational debt."

This Government's financial assistance will be available until November 30, 2023.