Victorian Aboriginal leaders will form a powerful new council that will help to set the Andrews government's agenda on Indigenous affairs, in another step to a historic state-based treaty.

The council will drive Aboriginal policy in Victoria, which community leaders said flipped the usual top-down bureaucratic model where policies that affect Aborigines are largely decided by non-Aborigines.

It will influence government decision-making on issues such as education, health care and housing and help to develop a plan to support Aboriginal self-determination.

Esme Bamblett​, chief executive of the Aborigines Advancement League, said the new council would give Victorian Aborigines a bigger say in policies that affect them. 

"The executive council will enable what we are saying to be heard and put into practice," Dr Bamblett said.

She said she hoped the council would make sure that money on Aboriginal programs was better spent, by providing a direct link between communities and the machinery of government.

"Because it's kind of like pointing an arrow and hoping to hit the target when you're not really quite sure where the target is, but I think this way the target will be evident," Dr Bamblett said.

The 60-year-old Aborigines Advancement League received $352,000 in government funding this week, part of a $3.52 million commitment by the Andrews government to Indigenous organisations.  

Minister for Aboriginal Affairs Natalie Hutchins. Photo: Stefan Postles

Minister for Aboriginal Affairs Natalie Hutchins said the executive council would give Victorian Aborigines a greater share of decision-making power.    

"We are truly committed to Aboriginal self-determination. These changes are non-negotiable," she said

Ms Hutchins said the government was also committed to a treaty with Victorian Aboriginals, in what would be an Australian first, and would seek to introduce legislation to Parliament to begin the process early next year.

Greg Phillips, an associate professor and research fellow in Aboriginal health, said the executive council  would hold government to account for its policy actions.

But he said Aboriginal self-determination would only succeed if non-Aboriginal people learnt to truly let go of power and control.

"Aboriginal people are very experienced at blaming whitefellas and the government, and whitefellas are very experienced at blaming blackfellas for our problems," Dr Phillips said.

"I want to know how we have a serious discussion about how we both understand what this land is teaching us and how we can live together."

Victoria is home to 47,000 Aborigines, according to last year's census.