Mr Latham said the party would introduce laws to force anyone claiming Aboriginal ancestry to prove it with a DNA test in a bid to stop "welfare rorters".

"Australians are sick and tired of seeing people with blonde hair and blue eyes declaring themselves to be Indigenous, when clearly they have no recognisable Aboriginal background and are doing it solely to qualify for extra money," he said.

"We will tighten the eligibility rules for Aboriginal identity to require DNA evidence of at least 25 per cent Indigenous - the equivalent of one fully Aboriginal grandparent."

Mr Lowe said he was shocked by the comments from Mr Latham.

"I think they're going back 200 years," he said.

Mr Lowe said he believed most people were honest about their identity.

"The whole system is disrespectful to Aboriginals," he said.

Mr Latham said under the current system of self-identification, "rorters and opportunists were masquerading as Indigenous" and accessing special Aboriginal programs and welfare benefits.

Self-identification refers to the voluntary and confidential declaration of Aboriginal identity and allows employers and institutions to keep track of how many Aboriginal people are applying for jobs or using services and make improvements where required.

Mr Latham claimed the proposal would help "weed out" rorters and create a more "honest and fair" welfare system.

"Everybody hates a welfare rorter, especially in Aboriginal affairs," Mr Latham said.

"Any waste of taxpayer funds in this area is highly disrespectful to genuine Indigenous."