Only one of seven targets set down almost a decade ago to improve outcomes in indigenous health, education and employment is on track to be met.
Prime Minister Malcolm Turnbull on Tuesday handed down the ninth annual Closing the Gap report, which has tracked the progress made so far in curbing disadvantage among Aboriginal and Torres Strait Island people.
"We cannot shy away from the stark reality that we are not seeing sufficient national progress on the Closing the Gap targets," Mr Turnbull said in his report.
"Although we are not on track to meet the ambitious targets we have set, we must stay the course."
The report found a target to halve the gap in mortality rates between indigenous and non-indigenous children by 2018 was not on track, nor was another to close the overall gap in life expectancy by 2031.
The government remains short of its target to enrol 95 per cent of indigenous four-year-olds in early education by 2025, and progress will need to accelerate to close the gap between indigenous and non-indigenous school attendance by next year.
A target to halve the gap for indigenous children in reading, writing and numeracy by 2018 is not on track, but the numbers are within reach.
Efforts to halve the gap in Year 12 attainment among indigenous Australians by 2020 are on track, but a push to halve the gap in employment outcomes between indigenous and non-indigenous Australians by 2018 is not.
Jackie Huggins, co-chair of the National Congress of Australia's First People's, said far more needed to be done to stem the "horrible" statistics underpinning indigenous disadvantage and it was time to draw a line in the sand.
"While there have been some positive changes the negatives totally overpower this in relation to where we are heading as a community," Ms Huggins told reporters at Parliament House.
"We say enough is enough, it is not good enough, and we deserve much better."
The federal government must start listening to indigenous people.
"Without investing in them, without adequately resourcing them, things will not change," Ms Huggins said.
"Listen to our people, walk with our people."
Indigenous leaders on Tuesday morning delivered the prime minister a blueprint for resetting government relations and curbing disadvantage among Aboriginal and Torres Strait Island people.
The Redfern Statement - backed by more than 30 organisations - calls for dozens of changes across health, justice, disability, education and family violence based on genuine engagement with indigenous communities.
It urges the reversal of federal budget cuts, targets to reduce incarceration rates and family violence, and a stand alone department for indigenous affairs.
Mr Turnbull said the government was committed to doing things with indigenous Australians, not to them.
"As we work together as a nation, all levels of government, to renew the Closing the Gap targets, input from the Redfern Statement alliance will be critically important," he said.
The government will redesign the expiring targets in partnership with indigenous people.
"We'll work to ensure that the Closing the Gap initiatives are community-driven and recognise that indigenous leaders are absolutely central - paramount - to finding the solutions in a way that supports identity and wellbeing," Mr Turnbull said.
