Mr Fraser is among a growing number opponents to the plan who say there has been little community consultation to date.
"If the government is wanting 99-year leases, it goes a long way to making sure Aboriginals can no longer control their own land," Mr Fraser said.
That view is shared by senior Indigenous figure Rosalie Kunoth-Monks.
She says many Territory communities feared the consequences of the government's leasehold push.
"Right now we are again traumatised because that's the last stable thing we feel under our feet: our earth, our ground, our home of thousands of years," she said.
Advocate and former journalist Jeff McMullin said the government’s motives were sinister.
"This is a drive by the new government for economic control of Aboriginal lands," he said.
"The land-grab is to facilitate the easy entry of miners for exploration and development."
But the government said the possibility of 99-year leases is a catalyst to building stronger communities capable of attracting business development and providing opportunities for locals.
Ultimately it will be up to the communities to determine whether they enter into an agreement, but in the meantime Malcolm Fraser is urging the Abbott government to review its position.
"There is a massive contradiction in the philosophy of the Liberal Party then and the Liberal Party today," he said.