Under the statewide treaty bill to be introduced to Victorian parliament on Tuesday, the state's Indigenous representative body would be made permanent and granted expanded powers.
It would act as a voice to state parliament that the government must consult on laws and policies affecting Aboriginal Victorians.
The in-principle agreement comes after almost 10 months of negotiations between the government and First Peoples' Assembly of Victoria, and the end of a state truth-telling inquiry exposing the mistreatment of Aboriginal people since colonisation.
In a joint statement with assembly co-chairs Rueben Berg and Ngarra Murray, Premier Jacinta Allan and Treaty Minister Natalie Hutchins noted Victoria had been on a path to truth and treaty for almost a decade.
"We have taken the time required to lay strong foundations for treaty and this bill represents a historical milestone in this journey," they said.
The body is named Gellung Warl, which means "tip of the spear" or "pointed spear" in Gunaikurnai language, in the treaty and legislation.
But it will continue to be called the First Peoples' Assembly of Victoria and operate out of a dedicated room within Victorian parliament.
The reforms would empower it to make funding decisions, including through a First Peoples' Infrastructure Fund that supersedes the Aboriginal Community Infrastructure Program from mid-2026.
Under the changes, the body could put forward traditional names for "specified geographical features" and push for ones deemed "offensive" to be renamed, if the latter was accompanied by evidence of why it was hurtful.
National and state parks, waterways and waterfalls on state-controlled land were within the scope but other geographic features could be included when agreed by the state and Gellung Warl, the treaty reads.
Truth-telling would be embedded in Victoria's public school curriculum up to year 10, including the Yoorrook Justice Commission's landmark final report handed down in July.
A future apology to the state's first inhabitants in parliament, to be negotiated at a later date, is also on the cards.
The proposed treaty states that the harm of colonisation has not ended, with ongoing discrimination in child protection, justice, health, housing, education and politics.
Yoorrook called for redress for post-colonisation pain and suffering in the form of restitution of traditional land, monetary compensation, tax relief or other financial benefits.
The 34-page document does not set out a redress scheme or contain details about how much the proposed treaty is expected to cost taxpayers.
But the treaty is slated to be reviewed every five years by an independent panel.
The legislation to enact the treaty will sail through the state's lower house, where the Labor government holds a commanding majority.
But the bill is expected to face intense scrutiny in the upper house, with the support of at least six crossbenchers needed for it to pass.
The Victorian opposition withdrew its support for a statewide treaty in January 2024 following the failed national referendum to constitutionally enshrine a voice to federal parliament.
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