Changes to the National Disability Insurance Scheme to rein in costs will boot 160,000 people from the scheme by the end of the decade, with all participants to undergo renewed eligibility assessments.
NDIS Minister Mark Butler is bracing for a fight, with states and territories expected to shoulder responsibility for those shifted off the scheme.
"I don't pretend - I've been around politics long enough to know - that there won't be some stoush, some continuing arm-wrestle," he said in Canberra on Thursday.
"Of course, we're not going to change eligibility and move people off the scheme before we're confident, and we know the community is confident, there are other systems of support in place."
Mr Butler hinted states and territories could be brought into line through the latest five-year public hospital funding agreement, which boosted federal funding by $25 billion.
Under the deal, governments jointly committed $10 billion over five years to fund foundational supports outside the NDIS, including $4 billion for the Thriving Kids program from October.
"We've put billions on the table to support those foundational support systems, but governments just have to get on with this," Mr Butler said.
NSW Labor Premier Chris Minns cautioned his state's public health system would not be able to provide the same level of care to those forced off the NDIS.
"We don't have the money to do it," he said.
"It's not because we're mean or we're stingy or we're trying to push people away. It's because we're flat out providing basic health care."
Western Australia Premier Roger Cook has backed the reforms but does not want the cost burden shifted to states.
Queensland Disability Services Minister Amanda Camm argued the scheme should have been overhauled sooner, while Victorian Attorney-General Sonya Kilkenny said Australians living with a disability had to be at the centre of the reforms.
Mr Butler insists the changes are necessary to ensure the viability of the scheme, which is set to cost more than $50 billion this year.
NDIS integrity chief John Dardo told a parliamentary inquiry into the scheme on Wednesday a "let her rip" mentality had developed among providers.
"In the current scheme today, the NDIS does not see for claims - through a plan manager or direct from a provider - a single piece of evidence before they're paid," he said.
"That has to change."
The proposal is slated to save the scheme $15 billion by 2030.
Disability activist Jarrod Sandell-Hay, who heavily relies on the NDIS to manage his cerebral palsy, bluntly described the federal government's announcement of cuts as a "dark day".
Another measure will cap the overall cost of social and community participation programs to 2023 funding levels, reducing the average participant's yearly spend from $31,000 to $26,000.
Mr Sandell-Hay said the reduction would directly affect his quality of life.
"When it rains in Melbourne, I am unable to use my electric wheelchair because if it gets wet, it will stop working, so I rely on support workers to drive me to places," the 37-year-old told AAP.
Going to work, grocery shopping and "all these very basic everyday things" would be in jeopardy for him and his wife, who was also on the scheme, Mr Sandell-Hay said.
A dozen disability rights groups have expressed concern about changes to the eligibility threshold, saying it could impact the scheme for a generation.
Martin Laverty, one of the NDIS's architects, called for patience while the renewed eligibility guidelines were drawn up by an expert panel and the disability community.
Opposition Leader Angus Taylor has vowed to work with the Albanese government on the legislative reforms.
"We'll make this as bipartisan as we possibly can but it must be sustainable," he told radio 2CC Canberra.
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