The Prime Minister has dismissed concerns that a controversial shared responsibility agreement with a remote Indigenous community could damage wider relations between Aborigines and the Federal Government.

The Government has offered to provide petrol bowsers to the remote Aboriginal community of Mulan in Western Australia if it agrees to a range of conditions, such as ensuring children there shower every day.

Labor says it is a patronising and unfair deal and Aboriginal leader Pat Dodson has described it as lunacy.

But John Howard has told Southern Cross radio that the proposal has wide support, including that of the National Indigenous Council which met yesterday in Canberra.

"I don't believe that it has destroyed prospects of a new understanding between the Government and the Indigenous community," he said.

"That wasn't the atmosphere of yesterday's meeting - yesterday's meeting was conducted in an incredibly positive atmosphere."