Prime Minister John Howard was responding to an officially commissioned report last week saying child abuse was rampant in indigenous communities in the Northern Territory, fueled by alcohol abuse, unemployment, poverty and other factors causing a breakdown in civil society.
"This is a national emergency," Howard told Parliament. "We're dealing with a group of young Australians for whom the concept of childhood innocence has never been present."
Some Aboriginal leaders immediately slammed the plan as paternalistic, saying they had not been consulted about it and that they objected to restricting how indigenous people can spend welfare benefits.
Others applaud the plan's requirement that at least half of area Aborigines' welfare checks be spent on food and other necessities - a measure aimed to cut spending on gambling and alcohol. They want similar conditions placed on payments in a trial in neighboring Queensland state.
Family welfare payments would also be linked to children's school attendance.
However, some warn that such a system - applied only to Aborigines - could breach federal discrimination laws.
Howard announced the measures for the Northern Territory, an Outback region where his federal government retains powers that it doesn't have over Australia's six states, and urged state leaders to apply similar tough rules in their jurisdictions.
The new measures would apply to about half of the sprawling Northern Territory, on land that has been returned to Aboriginal ownership under federal law over the past 30 years.
The sale, possession and transportation of alcohol would be banned for six months on the Aboriginal-owned land, Howard said, and sales would be reviewed after that.
The child abuse report said drinking was a key contributor to Aboriginal culture's collapse, and to neglect of children and creating opportunities for pedophiles.
Hardcore pornography, which the report found was rife in Aboriginal communities and available to children - who were thus desensitized to sex with adults, and who sometimes act out scenes with each other - also would be banned.
Publicly funded computers would be audited to ensure that they had not been used to download such images, the government said.
Some Aboriginal leaders immediately condemned the plan - which the government had not previously indicated it was considering - saying it exemplified government behavior that has disenfranchised their people and created social problems in the first place.
"I'm absolutely disgusted by this patronizing government control," said Mitch, a member of a government board helping Aborigines who were taken from their parents under past assimilation laws.
"And tying drinking with welfare payments is just disgusting," said Mitch, who uses only one name.
"If they're going to do that, they're going to have to do that with every single person in Australia, not just black people," she said.
Some civic leaders fear further alcohol restrictions could drive troublemakers off Aboriginal land into Northern Territory towns and cities, to live and drink on the streets.
Many Aboriginal communities already ban or restrict alcohol. Their residents sometimes travel to towns for drinking binges.
"We'd be concerned about anything that led to more people coming to town seeking alcohol," said Geoff Brooks, chief executive office of the Katherine Town Council.
The federal government can change laws in the territory with an act of Parliament, where Howard has a majority that ensures he can implement his policy.
Howard also urged state governments to send police to the Northern Territory to address an Aboriginal land shortage.
About 60,000 of Australia's roughly 400,000 Aborigines live in the Northern Territory - the highest proportion of indigenous residents anywhere in the country.
Many live in isolated, impoverished communities where jobs are scarce and substance abuse is widespread.
Aborigines are a tiny minority among Australia's 21 million people.
They suffer much higher poverty and addiction rates, and other problems. Their life expectancy is 17 years shorter than that of other Australians.