Legislation has been introduced to Federal Parliament seeking to end the Cashless Debit Card.
If the bill is passed, participants will be able to contact Services Australia to opt out and begin a transition phase depending on individual circumstances.
There will also be an option of voluntary income management.
From August 1 rather than being placed on the Cashless Debit Card, people in current locations who meet the eligibility criteria will be placed on income management.
Around 6,500 people are already on the card across Bundaberg and Hervey Bay.
Advocate Kathryn Wilkes says the decision will give people their dignity back.
"As much as we fought against forced income management people should have the right to choose income management if they want it," Ms Wilkes says.
Minister for Social Services Amanda Rishworth says the card stigmatises and often makes participants’ lives more difficult because they cannot access the cash economy.
She says the government will consult with affected communities to explore the future of income management and other supports that they may need.
“There will still be support available to those who need it, including opting in for voluntary income management, setting up Centrepay arrangements and referrals to local supports,” Minister Rishworth says.
But Member for Hinkler argues better planning is needed from the Federal Government in the transition process.
“I’ve said many times that Cashless Debit Card is not a silver bullet, it's just one tool in the toolbox to help our communities, and it has had a positive impact: children are going to school with lunch and are getting the essentials and rent rolls are being paid," Mr Pitt says.
“It’s not acceptable to me, or the community I represent, if Labor decides to just do nothing.
“The Albanese Government also needs to explain what will happen to the $30 million Jobs Fund and Job Ready Package which was to upskill Cashless Debit Card participants to help them secure employment.”