Only a fraction of packaged food carries the new Health Star Rating designed to help families buy healthier food.
If the numbers don't dramatically change in the next year, the federal government should make the scheme mandatory, says researcher Dr Kristina Petersen from The George Institute.
The system gives products a rating out of five, with the higher number of stars indicating a healthier food.
The government introduced the system in June 2014 on a five year voluntary basis as a way to simplify food nutritional information to help consumers.
An institute supermarket survey and contact with 39 food manufacturers revealed that 1865 products are carrying the HSR.
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"However, there are certainly more than 20,000 products that should have an HSR and quite possibly close to double that number," Dr Petersen said.
"The government has decided the Australian community needs Health Star Rating labels so it should follow up with an implementation plan to match.
"The health of Australians is too important to leave to a voluntary program.
"This is a good start but if we don't see massively increased coverage in the next 12 months it needs to be mandatory.
"One key issue is that government still hasn't set any explicit targets for what it expects."
