The prime minister relocated the machinery of government to Bamaga to continue honouring his promise to spend a week each year in a remote Indigenous community.
He has been joined by at least eight ministers, including Attorney-General George Brandis, Social Services Minister Scott Morrison and Health Minister Sussan Ley.
"You see, we are almost having a cabinet meeting up here," Mr Abbott quipped before a community dinner by the sea.
"As a sign of respect for you and our determination to become more familiar with the issues of Indigenous Australia and remote Australia."
Mr Abbott was welcomed by traditional dancers, donning grass skirts and large headdresses.
Northern Peninsula Area mayor Bernard Charlie urged the prime minister to help NPA residents gain access to quality education, housing, health and other services.
Earlier, on Thursday Island in the Torres Strait, Mr Abbott honoured local veterans by pinning medals on their chests and attending a remembrance ceremony.
"At a time when Indigenous people were not even counted in the census, Australia could count on Indigenous people," he said at the ceremony.
Despite not being recognised as citizens and earning two thirds less than white soldiers, almost every able man on the Torres Strait islands volunteered to fight for Australia in World War II.
Even some who were not able, like Palm Bill Stephen, lied to join the 1100 enlisted Torres Strait islanders.
Mr Stephen, now 86, changed his name and date of birth to sneak into the army and fight alongside his four brothers.
"I was 15, but I was big enough," he said.
He credits the lie with teaching him valuable life lessons in the army, but it also rendered him an unknown soldier.
More than 70 years after he fought for the nation, Mr Stephen has finally been recognised by the Australian Defence Force for his efforts during WWII.
With the help of federal government MP Warren Entsch, whose electorate covers the Torres Strait, the war records of Palm Stevens - spelt with a "v" and birth date unknown - were matched with the man who lives in Broome.
Mr Entsch said the army had repeatedly denied Mr Stephen had fought but once he got his hands on the records and recognised the similarities in the names, he put two and two together.
He told AAP he applied for Mr Stephen's medals and brought them up just in time for the Thursday Island event.
Horn Island was the second most bombed place in Australia as the threat of a Japanese invasion grew closer.
About 500 bombs were dropped on the island, killing 156 people.
Torres Strait Historical Society member Maree Gonzo said Torres Strait islanders had 100 per cent support from their fellow army men.
"The veterans have told me that's the first time they really felt like they were all Australians, all Australians fighting for the same thing," Ms Gonzo told AAP.
Mr Abbott has pledged not to become a prisoner of Canberra and forget issues affecting the people.
He and his ministers will focus on health and education while in Bamaga and surrounding areas.