Aboriginal and Torres Strait Islander organisations have for years campaigned to restrict the sale of inauthentic Indigenous art.

A parliamentary report into the issue was presented to the government in 2018, which found 80 per cent of Indigenous souvenirs sold in Australia were not genuine.

Indigenous Australians Minister Ken Wyatt acknowledged fake art was offensive to First Nations people, diminished their economic opportunities and misled customers.

He and Arts Minister Paul Fletcher are now proposing to develop a plan to fix the problem in consultation with Indigenous artists.

"Indigenous visual art is highly sought after both in Australia and abroad for its quality, innovation and cultural richness," Mr Fletcher said on Wednesday.

"Until the start of COVID-19, art sales had been growing for almost a decade.

"But the pandemic has dramatically impacted the industry with art centres, galleries and studios closed, and art fairs and events cancelled or postponed, which only strengthens the need for a plan."

The proposed plan will build on a digital labelling trial under way and existing federal-state funding for the Indigenous Art Code.

Mr Wyatt is not ruling out legislating a ban on selling fake Indigenous art.

Analysis provided to the parliament found in the 2017/18 financial year, there were 978,000 international visitors and 715,000 overnight domestic trips that included an Indigenous tourism activity.

This included art, craft and cultural displays, visiting an Aboriginal site or community, or attending an Indigenous performance.

These visitors collectively spent $8.4 billion during their trips.

Almost 200,000 international visitors in that year purchased Indigenous art, crafts or souvenirs.

Australian Associated Press