A contentious mandatory alcohol treatment scheme has been abandoned in the central Australian town of Tennant Creek because too few people were being referred to the service, the Northern Territory Government says.

NT Health Minister John Elferink said because a separate policy restricting the flow of alcohol by putting police outside bottle shops had been so effective, rehabilitation beds often sat empty, making the program poor value for money.

In 2013, the Northern Territory Government began rolling out its election pledge to force alcoholics into treatment centres around the Northern Territory in spite of fierce opposition from health and legal groups.

Tennant Creek has battled with high rates of alcohol-related violence for decades.

But just over a year since the Tennant Creek program began, Mr Elferink said he was preparing to shut it down because only five people had been referred to it over that time and the cost per patient was unacceptable

"In Tennant Creek ... the demand on mandatory treatment has crashed through the floor," he said.

"The amount of money we spend in Tennant Creek is too much."

Mr Elferink said the small number of patients in Tennant Creek meant the cost for each person going through the three-month treatment in the town was $400,000, compared to $30,000 in Alice Springs.

"When you consider the hand-full of people that have gone through, it's just too much per patient," he said.

"So we'll refer those people down to Alice Springs where the cost per patient presentation is substantially lower and you get better bang for buck," he said.

He praised the Government's policy of putting police outside bottle shops to monitor alcohol sales.

"If you see the fall in violent crime in Tennant Creek in particular in the crime statistics you wouldn't recognise the place," Mr Elferink said.

"I'm not saying everything's been cured but there's such a substantial improvement ... so the presentations are much lower," he said.

Mr Elferink, who took over responsibility for mandatory rehabilitation after a reshuffle late last year, made a similar decision in the town of Katherine several months ago, shelving plans to spend $5 million on a mandatory alcohol rehabilitation centre, opting instead to continue putting police outside bottle shops.

In Katherine the small number of referrals also meant the program was costing too much and could not be justified, Mr Elferink said.

The news of the shutdown came as a surprise to the organisation running the program, the Barkly Regional Alcohol and Drug Abuse Advisory Group, with Mr Elferink admitting he had failed to notify them before making the news public.

Mandatory treatment 'worthwhile in Darwin, Alice Springs'

Mr Elferink said mandatory treatment was worthwhile in the Territory's larger centres, Alice Springs and Darwin, where it was more difficult for police to monitor all take-away bottle shops.

Overall in the Northern Territory there was continued demand for the program, with 175 referrals over the past year, Mr Elferink said.

A review into mandatory alcohol treatment begins next month.

But Mr Elferink said he was willing to accept the findings of that review, even if that meant abandoning the scheme altogether.

"I think that we as a Government, we will have to be courageous enough to say 'look if it isn't meeting the expectations or what we hope then we walk away from it' ... and say 'noble attempt but it hasn't passed muster'," he said.

On the other hand, Mr Elferink said if the reviewers found that many of the several hundred people who had been through mandatory treatment had gone on to a better life, the program would be worthwhile.

"It's a case now of doing a review and doing a realistic review and then saying 'does this thing work or not?'" he said.

In what would mark a policy shift for the Government, Mr Elferink said he wanted to use $1 million of the more than $3 million earmarked for mandatory treatment in Tennant Creek on early childhood intervention programs instead.

He said he would take the idea to his cabinet colleagues.

"So we are getting to kids early in life rather than of course dealing with alcoholics, many of whom are at the end of their life," he said.

Mr Elferink defended the timeframe for the review of mandatory rehabilitation, which will not be finished until after next year's Territory election, and said the reviewers will need time to trace all the people who have been through the program.

Government alcohol policy 'chaotic'

Gerry McCarthy, the Member for Barkly - which includes Tennant Creek - said the reason there were so few referrals to the local rehabilitation centre was because laws to broaden the type of people who could make the referrals had been left on hold by the Government.

"At the moment only the police can refer," he told 783 ABC Alice Springs.

"There is no real coordination in this policy.

"This has been a chaotic alcohol policy from the start."

Mr McCarthy said the Government's decision to station police out the front of bottle shops had led to a drift of problem drinkers from urban centres to other regions.