After consulting across the country, the government will on Monday introduce the reforms to parliament that could see people taken off the cashless debit card scheme in less than two weeks.
The government says the card is part of a failed program and the legislation will instead bring a range of measures to empower communities and leave them better off.
Income management would be made voluntary in what has been the four cashless debit card trial sites of Ceduna, East Kimberley, the Goldfields and Bundaberg-Hervey Bay.
Social Services Minister Amanda Rishworth said abolishing the card was a carefully considered measure that would benefit communities.
"We've heard from communities about what they need and these measures deliver on that," Ms Rishworth said.
It comes after a parliamentary committee last month found the card had been "harmful" and detrimental to the autonomy of individuals, families and communities.
It also recommended addressing concerns about how the scheme was used in Queensland's Cape York.
The debit cards were introduced by the coalition in 2016 and rolled out to multiple communities, such as in Cape York and Ceduna.
The cards allowed for up to 80 per cent of welfare payments to be placed on them, that could not be withdrawn for cash or spent on gambling or alcohol.
The government said under the new scheme, Cape York residents would keep their powers of self-determination, with community members being counselled on income management by the Family Responsibilities Commission.
People using the card in the Northern Territory will be moved back to arrangements in place before the card was implemented.
Some 17,300 people will be transitioned to new arrangements.
If the government can secure the legislation's passage through the House of Representatives and Senate this week, welfare recipients in trial sites will be able to move off the card by October 4.
The government will also provide additional staff to Services Australia in cashless debit card sites to help people with the transition, and social workers will be deployed for complex issues.
Funding has been extended for 44 essential community services in affected communities, and some $49.9 million has been committed to additional alcohol and drug treatment services in the trial sites.
A further $17 million will be spent on creating employment opportunities in the trial site towns after the program is abolished.
Indigenous Australians Minister Linda Burney said the government had listened to local communities, and would continue to consult with individual communities when it came to income management.
"Entrenched disadvantage must be tackled by adequate support that addresses the causes of that underlying disadvantage and builds capacity." Ms Burney said on Friday.
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