SNAICC, the peak body for Indigenous children, welcomed the $5 billion investment to reform early education and care.
Chief executive Catherine Liddle said the commitment is an important foundation to "help shift the dial" in Closing the Gap efforts.
"We know investing in early education and care not only sets up our children to thrive, it makes all the difference to their life outcomes and builds stronger and resilient families where children are less likely to enter child protection and youth justice systems," she said.
Much of the spending allocated in Tuesday night's budget had been announced previously, including $50 million already earmarked to reduce the price of essential grocery items in remote communities.
Minister For Indigenous Australians Malarndirri McCarthy said she was "very pleased" with this effort towards food security in remote communities, and efforts to tackle rheumatic heart disease, with $11.4 million in the budget to establish or upgrade 12 laundry facilities in remote communities.
"I'm very concerned about rheumatic heart disease that impacts so many First Nations people," she told the ABC.
"We know that something as simple as having more laundries in our communities and accessible has assisted and will assist in reducing and bringing those numbers down."
A $21.8 million investment to provide domestic and sexual violence services to First Nations communities was welcomed by peak organisations, as was $27.4 million promised to improve access to culturally safe mental health care and 150 scholarships for First Nations psychologists over the next four years.
"This Budget gives us cause for cautious optimism," Coalition of Peaks lead convener, Pat Turner said.
"Every dollar invested in Aboriginal community-controlled organisations delivers better value. It drives stronger outcomes for our people, builds local economies, and makes public spending more effective - because the work is done with community, not to community."
Despite calls from the National Aboriginal and Torres Strait Islander Legal Services to support their work, they did not secure funding in the budget.
Independent Senator Lidia Thorpe said community-controlled legal services are "under massive strain".
"While we're seeing a crisis of youth incarceration around the country, this budget does not once mention the word 'youth', and it offers nothing new in targeted support for young people to avoid incarceration," she said.
"There is no additional investment in legal assistance services, or investment in support and diversion for young people away from the justice system."
Ms Thorpe also pointed out there was no funding earmarked for truth-telling and treaty efforts but said that came as "no surprise".
Ms Liddle said she was also disappointed to see the budget failed to implement measures under the 'Safe and Supported' national plan to protect Australian children, and did not include a new model for Aboriginal community-controlled early education.
