The Western Australian government will cease funding some remote Aboriginal communities and develop 10 large communities into “normalised” towns under a $220m plan that links better housing to school attendance and employment targets.

But the reform “roadmap” has been criticised for closing smaller remote Aboriginal communities “by stealth” and adopting the same paternalistic approach that has been tried, and failed, over decades in remote communities.

The regional development minister, Terry Redman, and minister for child protection, Andrea Mitchell, launched the “Resilient Families, Strong Communities” report in Kununurra, 3,211km north-west of Perth, WA, on Thursday.

It followed an eight-month consultation process by the former head of the housing department, Grahame Searle, to map out options for reform. That process started after the WA premier, Colin Barnett, sparked international protests by suggesting that up to 150 of the state’s 274 remote Aboriginal communities may have to close after a loss of federal government funding.

About 12,000 of the 95,000 Aboriginal and Torres Strait Islander people in WA live in remote communities, which are a mixture of former missions, homesteads and communities built on traditional grounds. Most of them are located in the Kimberley and Pilbara regions and have fewer than 50 permanent residents.

The Barnett government has since moved away from the suggestion remote communities would be “closed”, but said in the report that some smaller communities would cease to receive funding.

“In concentrating on towns and larger communities, the state government expects to support fewer communities over time, particularly as migration away from small outstations continues,” it said. “However, the state government will not prevent Aboriginal people from living remotely or continuing to access country for cultural purposes.”

Speaking to a group of Aboriginal and community leaders in Kununurra, Redman said the government would, by the end of the year, select 10 larger communities “for future investment into services and to normalise the service provision” which would go with “some mutual responsibilities about paying rent, and paying for water, and paying for power”.

That investment, he said, would “ensure that we can pathway those communities to have commensurate services that you would have on an equivalent sized community … [as] a town in the [highly developed] south-west, and rightly so”.

Robin Chapple, a state Greens MP who has a deep history in Aboriginal affairs in WA, said removing funding for services in smaller remote communities, which are often on traditional lands, was “the removal of people off country by stealth”.

Chapple said attempts to move Aboriginal peoples off their traditional lands and into larger towns or communities had failed repeatedly in the past, and created the social issues that Barnett, who justified his closure comments as having a moral not an economic imperative, had claimed were the impetus for reform.

“If you look at any of the work that has been done in this area, remote communities are the safest places,” he told Guardian Australia. “That’s where you send troubled kids, to get them away from the bad influences in town.”

He said previous attempts to transition remote communities into gazetted towns had been “an abject failure”.

“You end up with all of these houses with nobody living in them because they can’t pay rates and people around the houses living in the dirt,” he said.

“If the thinking is that by some form of ‘glorified normalisation’ which is almost a form of assimilation by stealth that we can fix this, it’s not going to happen.”

The package announced on Thursday included $200m to expand a transitional housing model currently developed by the Wunan Foundation in Kununurra to the rest of the Kimberley, which would provide 300 houses for families that can meet the dual requirement of at least one parent in employment and an 85% school attendance rate.

The report also said WA would work with the new Turnbull government to implement a compulsory rent deduction scheme for public housing, and would set targets for Aboriginal employment and contract procurement in government agencies based on rates of Aboriginal population in that local area.

Other funding included $25m for 22 of the Kimberley’s 44 schools, offered on an opt-in basis “to support those ready for reform” and $20m to “transition” Aboriginal reserves on the outskirts of towns in the Pilbara, a mining region further down the north-west coast.

Reserves are areas of crown land set aside for Aboriginal use on the outskirts of towns that have become characterised by overcrowded, rundown housing.

There are 320 people living in six town-based reserves across the Pilbara, the most overcrowded of which, Parnpajinya, on the outskirts of the inland iron-ore mining town of Newman, has 60 people living in 11 houses.

Redman said the Pilbara Development Commission, an economic development agency based in Port Hedland, had been tasked with “transitioning” those reserves into areas with the same services – and the same obligations to pay utilities and rates, which they currently do not have – as an ordinary part of town.

He said the funding in all projects would be focused on “supporting those communities that actually want to reform and change”.

Ben Wyatt, a Yamatji man and Aboriginal affairs spokesman for the state opposition, said the report appeared positive but information about the government’s response was light on detail.

Wyatt said it was “hard to disagree” with the governing principles or core findings of the report, but told Guardian Australia there was “certainly an overarching there that you can come with us or get left behind”.

Redman, he said, had “recognised that Mr Barnett’s demand to close communities was disrespectful and caused great anger across Aboriginal Western Australia”.

“We move now, from this conservative government, to a much more rational and fair dialogue with Aboriginal people.”

Redman said he was counting on bipartisan support for the reforms to ensure they survive past the state election in March 2017.