The announcement comes after the most recent Australian Institute of Health and Welfare report, Child Protection Australia 2015-2016, found that Aboriginal and Torres Strait Islander children were twelve times more likely to be taken from their families that other kids.
ACT Minister for Children and Youth, Rachel Stephen-Smith, says while there are already some initiatives in place, like the Step Up for Our Kids program, much more needs to be done in the early intervention phase.
"To ensure we're understanding the root causes of children and young people coming into the child protection system and into out-of-home care, and that we're addressing that in a way that keeps families strong and keeps communities connected, [we need to] keep young people and children connected to their families and to their culture," she told NITV News.
She says the government will not rush this complex review.
"We will give it time to fully explore all the issues. It is crucial that both the process and any decisions keep children and young people at the centre, with their needs and best interests paramount," she said.
The review is expected to examine case-planning for Aboriginal and Torres Strait Islander children and young people known to the ACT Child and Youth Protection Services.
The task will be carried out by a team led by skilled Indigenous people with experience in child protection.
They will work alongside independent experts who sit on the Child and Youth Protection Quality Assurance Improvement Committee panel, which was established last year, as part of a $2.47 million initiative under the Safer Families package.
The Minister says the primary focus of the review will be to inform systemic improvements to provide a deeper understanding of the problem and how best to respond.
"The Government will engage with Canberra’s Aboriginal and Torres Strait Islander communities and key Indigenous organisations in the development of the review, as their input will be essential in designing an effective review methodology," she said.
The Secretariat of National Aboriginal and Islander Child Care, SNAICC, welcomes the inquiry.
Fleur Smith, Coordinator for the SNAICC's Family Matters campaign, told the Canberra Times the problem is worse now that it was twenty years ago when the Bringing Them Home report was released.
"Nationally, on average Aboriginal kids are nearly 10 times more likely to be removed from families in out-of-home care," Ms Smith told The Canberra Times.
"This time 20 years ago there were 10,000 kids in care and one in five was Indigenous. Now there's almost 46,000 in care and one in three are Aboriginal and Torres Strait Islander."