A parliamentary committee has endorsed the federal government's plans to trial welfare debit cards at three sites including Ceduna in South Australia.
But the community affairs Senate committee wants the legislation to be amended to ensure vulnerable people can leave the trial so they are not further disadvantaged.
The cashless welfare program, which deposits 80 per cent of welfare payments onto a card that limits where it can be spent, was a recommendation from a indigenous employment review undertaken by mining magnate Andrew Forrest.
The trial is designed to test whether a cashless system will help reduce abuse of drugs, alcohol and gambling by people on welfare.
The committee's report says a number of parties supported the program, while some expressed concerns about a lack of services to accompany the trial.
Others were worried that current income management programs had been ineffective.
A 2014 study of the Northern Territory income program, where 50 per cent of welfare is deposited to the Basics Card, found there was "no evidence of changes in spending patterns".
That's a concern echoed by the Australian Greens in a dissenting report, which claims the program will "disempower and harm" people most in need.
Labor also has concerns about a lack of evidence and detail in the proposed legislation.
Indigenous leaders from Ceduna were in Canberra on Monday to convince Labor and crossbench senators to support the trial.
The Ceduna Aboriginal Corporation told the inquiry children were going without food and essential clothing and failing to attend school.
Some were enduring all-night parties and assaults by adults because of alcohol, the body said.
Assistant minister to the prime minister Alan Tudge on Monday confirmed additional drug and alcohol services would be part of the trial, which was co-designed with Ceduna community leaders.
He said leaders had given the nod to the trial and were confident it would be good for people in the region.
But opposition indigenous spokesman Shayne Neumann accused Mr Tudge of trying to avoid scrutiny of the debit card using "baseless scaremongering" and politically motivated deceit.
He fears the legislation is rushed and has called for proper consideration.
Aboriginal and Torres Strait Islander Social Justice Commissioner Mick Gooda also wants the trial put on hold until communities have fully assessed the proposal.
"There has been significant debate about whether income management is an effective way to support disadvantaged individuals and families," he said on Monday.
The bill passed the House of Representatives without opposition from Labor and is listed for debate in the Senate on Monday.
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