A subclass of millions of Australians will be created if the government goes ahead with a "demeaning" proposal to restrict how welfare recipients spend their benefits, community sector and indigenous organisations say.

More than 35 groups, led by the Australian Council of Social Service, have signed a joint statement to the Abbott government, demanding that it does not roll out the "Healthy Welfare Card" recommended by businessman Andrew Forrest in his review of indigenous employment and training.

Fortescue chairman Andrew Forrest .. the miner has lifted its 2015 production guidance by up to 10 million tonnes to 165 million tonnes.

The groups, which include the St Vincent de Paul Society, Relationships Australia, Mission Australia, the National Congress of Australia's First Peoples and National Aboriginal and Torres Strait Islander Legal Services, say the card would be "demeaning, invasive, unworkable" and create "an entire subclass of millions of people in the Australian community".

In his review, released in August, Mr Forrest called on the government to issue a debit card to all welfare recipients to ensure they do not spend the funds on things like alcohol and gambling. He argued this would direct "spending to purchases that sustain and support a healthy lifestyle ... and to savings for larger expenses".