Indigenous groups have welcomed the planned inclusion of more Aboriginal and Torres Strait Islander representation in the Closing the Gap initiative.
At the Council of Australian Governments (COAG) meeting in Adelaide on Wednesday, it was announced Indigenous leaders would have more say about their future.
Governments and Indigenous groups will share ownership for Closing the Gap and work on targets for monitoring of the agenda.
The current targets include things like life expectancy, mortality rates for children, school attendance and job outcomes.
A formal partnership between Australian governments and Indigenous leaders will be settled by February.
"COAG is listening to Aboriginal and Torres Strait Islander people, communities and their peak and governing bodies," a COAG statement said.
"Aboriginal and Torres Strait Islander people must play an integral part in the making of the decisions that affect their lives."
Indigenous-led reviews will be held three times a year.
The National Aboriginal Community Controlled Health Organisation called the COAG plans a "significant step forward".
"This is something that we've long campaigned for because involving Aboriginal and Torres Strait Islander people in decisions that affect their lives will lead to far better outcomes," the organisation's chief executive Pat Turner said.
"Aboriginal and Torres Strait Islander peoples were not included formally in the original Closing the Gap strategy."
Framework and draft targets will be finalised through COAG by mid-next year.
Northern Territory Chief Minister Michael Gunner said it was a vital partnership and initiative could not afford to "go off the rails again".
"We can't close the gap unless we do this in partnership with Aboriginal people," he told reporters on Wednesday.
"I think the wording of what we're doing so far on Closing the Gap is good but we have to talk funding at some stage."
Victorian Premier Daniel Andrews said the partnership provided a meaningful opportunity, the "likes of which we've not seen before".
"Where we actually let Aboriginal and Torres Strait Islander Australians lead the discussion, determine the outcome, own the outcome," he told reporters.
