The Federal Government's bill to trial a new cashless welfare card has passed the Senate.

Welfare recipients in the South Australian town of Ceduna — and vast areas around the town — would have 80 per cent of their payments placed on a bank card that cannot be spent on alcohol or gambling or converted to cash.

Most people affected by the Healthy Welfare Card trial around Ceduna would be Aboriginal.

"The objective of this is to significantly reduce the welfare fuelled alcohol, drug and gambling abuse which unfortunately is prevalent in so many communities," Assistant Social Services Minister Alan Tudge said.

"We've been discussing — particularly with the Ceduna leaders for probably six months now — we've been having weekly meetings with them.

"At every single one of the five communities affected in the area of Ceduna, they've passed resolutions in favour of participating in the trial."

The bill passed with the support of the Labor Party and seven of the eight crossbenchers.

The Federal Government hopes to soon announce a second trial site in Western Australia's Kimberley region.

"We're in advanced discussions with the leadership in the east Kimberley," Mr Tudge said.

"In relation to a third site, we're at earlier stages of consultations in two or three other areas.

"The Ceduna trial will begin at the end of February, the subsequent trials will be staggered thereafter."

Mr Tudge said anyone put on the trial in Ceduna who moves away from the area will still be part of the trial.

"The nature of this card is that it will work at every single location in the country, but there's not a single bottle shop in the country where it will work, not a single gambling house in the county where it will work, and not a single ATM where you'll be able to withdraw cash from," he said.

A Senate committee recommended vulnerable welfare recipients should be allowed to exit the trial.

The bill was passed without amendment.