The Canadian government has failed to implement a legally binding decision ordering it to provide equitable funding for Indigenous child welfare services, the Canadian Human Rights Tribunal has said.

In a decision released on Thursday, the tribunal stated that Ottawa has failed to grasp "the seriousness and emergency of the issue" by not complying with a 2016 order to ensure indigenous child welfare services were properly funded.

It is the fourth non-compliance ruling on the matter since the 2016 order was issued.

The tribunal investigates allegations of discrimination and can order fines or other legally binding remedies.

"While the necessity to account for public funds is certainly legitimate, it becomes troubling when used as an argument to justify the mass removal of children rather than preventing it," it said in its ruling.

"There is a need to shift this right now to cease discrimination. The panel finds the seriousness and emergency of the issue is not grasped with some of Canada's actions and responses."

In 2016, Canada was found to have discriminated against 165,000 indigenous children in the allocation of funds for child and family services, on reserves across the country.

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It was ordered to ensure that the level of services available to indigenous children equals that available to non-indigenous ones.

Jane Philpott, Canada's minister of indigenous services, said Ottawa was taking "immediate action" to comply with the tribunal's decision.

She said the government will cover the costs "for prevention, intake and investigation, legal fees, building repairs" at 105 First Nations Child and Family Services agencies, and reimbursing all costs dating back to the 2016 tribunal ruling.

"Since November 2015, our government has made significant investments and worked with indigenous leaders, communities and experts to reform First Nations child and family services," Philpott said in a statement.

"We remain committed to this reform, to recognise and advance indigenous-led solutions, and support communities to draw down jurisdiction in this area."

Fourth non-compliance order

But the tribunal's ruling is the fourth non-compliance order issued against Ottawa in the matter, the First Nations Child and Family Caring Society of Canada said.

"The Tribunal found that Canada's focus has been on financial considerations and not the best interests of children," Cindy Blackstock, the group's executive director and a prominent advocate for the rights of indigenous children, said in a statement.

"The government has treated some of the tribunal's rulings like recommendations. They are not recommendations; they are legally binding," Blackstock said.

Alvin Fiddler, Grand Chief of the Nishnawbe Aski Nation, which represents 49 indigenous nations across Ontario, described the decision as "a huge win" for indigenous children.

"The panel recognised that Canada's 'business as usual' approach was a conscious choice to perpetuate discrimination," Fiddler said in a statement.

He said, however, that "the good news" is that the Canadian government is working in collaboration with indigenous leaders and agencies "to develop solutions" to the problem.

Over-represented in care

Indigenous children are over-represented in child welfare systems across Canada.

For every 1,000 First Nations children, 13.6 out-of-home welfare placements were recorded, compared with only 1.1 placements of non-Aboriginal children, a 2015 report on indigenous children in care reported.

The over-representation "is an extension of the historic pattern of removal of children from their homes", the report stated.

That includes Canada's residential school system and a policy known as the Sixties Scoop that forcibly placed indigenous children into adoptive or foster homes for decades.

"The residential school system removed and isolated children from the influence of their homes, families, traditions and cultures. Residential schools and the systemic adoption of Aboriginal children by non-Aboriginal families disrupted families and communities," the report said.