Row over rare indigenous disease grant

The Abbott government has left the door open on providing taxpayer money to the Machado Josephs Disease Foundation, despite overturning a $10 million grant.

The previous Labor government had pledged the money to the foundation from the Aboriginal Benefit Account, which holds mining royalties generated from indigenous land in order to benefit communities.

Indigenous Affairs Minister Nigel Scullion has overturned the grant arguing it was an improper use of the benefit account that would set an undesirable precedent.

"I have asked my department to work with the foundation to explore other more appropriate funding sources," Senator Scullion said in a statement, adding he acknowledged the good work of the foundation.

Machado Josephs Disease is a degenerative condition that mainly affects Aboriginal people from Arnhem Land and causes sufferers to lose control of bodily functions.

The disease belongs to the same family as Huntington's Disease.

About 80 people suffer from the condition in the NT.

Labor NT senator Nova Peris believes the grant was appropriate because the benefit account receives mining royalties from Groote Elyandt, where the disease is most prevalent.

She said the funding cut would impact on therapy, equipment and case management and urged the federal government to reinstate the money.