The Federal Government has banned regular unleaded fuel in communities around Katherine and Tennant Creek in the Northern Territory in a bid to reduce rates of petrol sniffing.

It is now illegal to supply, transport or possess regular unleaded petrol in the Katherine and Tennant Creek regions.

The Federal Government is supplying Low Aromatic Fuel as a replacement in these communities, which does not provide a high when sniffed.

The move was foreshadowed in January, with Indigenous Affairs Minister Nigel Scullion blasting critics of non-sniffable fuels.

"It's like saying penicillin is not important. This is a time-proven product that has never hurt a car," he said at the time.

He said if a business sells regular petrol it could be fined up to $54,000.

Senator Scullion said he expected petrol sniffing rates in the Tennant Creek and Katherine regions to go down by up to 90 per cent now the sale of regular petrol was illegal.

He said the ban took time to implement because the Government wanted to consult with affected retailers and communities.

"You do need to have absolute confidence in the level of consultation you've undertaken. It's been a comprehensive consultation," he said.

"We know that the rollout across the region will reduce petrol sniffing in communities by between 88 and 90 per cent, that's what we know."

"It's not going to stop them sniffing - they have to find some avenue to find out why they're sniffing it, and you know, put them into some sort of program to try and get them out, like a drug and alcohol rehab sort of thing."

"We had to get our pumps refitted, which the government has kindly paid for the new gaskets and seals so thats good but when the territory electrical mob was here to do those replacements they advised us that one of our pumps was that old that you can't get replacements for it anymore, and we had to actually buy a new bowser, so that has cost us $6000 already."

"Throughout the territory there is probably a few service stations that have got outdated pumps that would have to be replaced to be able to take this new fuel."

Kylie Smith, manager of Tennant Creek Service Station, said they had to spend $6,000 in order to be able to sell the new fuel.

"We had to get our pumps refitted, which the Government has kindly paid for, the new gaskets and seals, so that's good," she said.

"It's not going to stop them sniffing - they have to find some avenue to find out why they're sniffing it, and you know, put them into some sort of program to try and get them out, like a drug and alcohol rehab sort of thing."