The Federal Government's Indigenous work-for-the-dole scheme has issued over 350,000 fines to its participants in just two years.

The Community Development Program (CDP) is a scheme that sees unemployed people in remote locations to work to receive welfare, but has been criticised for making participants work up to three times longer than city-based jobseekers.

The CDP’s activities are compulsory for its 15,000 largely Indigenous participants, and it imposes financial penalties for missing activities or being late.

“[People are] being listed as failures by being penalised and having their income lessened or removed,” said Australian Council of Social Service (ACOSS) president Tony Reidy.

“That has a severe impact on people as human beings.”

CDP participants were fined more during April, May and June than every other jobseeker in Australia combined.

ACOSS says CDP is deeply flawed.

“It's illogical and it's being applied incorrectly,” Mr Reidy said.

“Thousands of those people are going without much-needed income support, sometimes for days or weeks, because of the program.”

A spokesperson for Indigenous Affairs Minister Nigel Scullion has defended the system.

“It is important to note that penalty amounts are low and the number of people penalised is also low,” he said in a statement.

“The passive welfare model that ACOSS and other groups would have us implement would be devastating.

“We have heard consistent support for mutual obligation requirements.”