A pledge to close the health and wellbeing gap between Aboriginal and other Australians is failing, the government has admitted, describing the situation as a source of "national shame".

Prime Minister Scott Morrison told Australia's parliament on Tuesday that just two of seven key targets to improve the lives of the country's Indigenous people were on track - unchanged from last year.

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More Aboriginal children were enrolled in early education and graduating from high school than ever before, he said, but attendance rates were still lagging behind other groups.

Other targets to halve the gap in child mortality, literacy, life expectancy, and unemployment rates were not being met.

Morrison called the failure to give Indigenous children opportunities equal to other Australian kids "a national truth and a national shame".

Colonisation

The admission comes 250 years since Captain James Cook's first voyage to the vast continent, a journey that led to British colonisation and upended Indigenous communities.

The life expectancy for Aboriginal Australians is about eight years lower than the national average.

Indigenous children are twice as likely to die before their fifth birthday and 25 times more likely to be imprisoned than the rest of the population, according to official statistics.

The report marks 12 years since then-Prime Minister Kevin Rudd made a historic apology to Aboriginal people for centuries of injustice and launched the "Closing the Gap" initiative.

Morrison said on Tuesday that the policy would be replaced after consultation with the community.

"Over decades, our top-down, government-knows-best approach has not delivered the improvements we all need," Morrison said. "The results are not good enough."