The arrival of British settlers in Australia was "all bad" for indigenous Australians, Prime Minister Tony Abbott has declared, as the federal government prepares to set the timeline for a referendum on indigenous recognition in the constitution.

Mr Abbott has told British newspaper The Telegraph that "we have not entirely come to terms with this side of the Australian reality" and that recognising Aboriginal people in the constitution would address a "discomfort in our national character".

Tony Abbott during his visit to North East Arnhem Land last week. Credit:Alex Ellinghausen

The Prime Minister made the comments during his visit to Arnhem Land last week, which was to make good on an election commitment to spend at least one week a year in a remote community. His visit was cut short after counter-terrorism raids in Sydney and Brisbane.

He told the newspaper that the arrival of British settlers was devastating for Aborigines.