Scott Morrison has warned the future of the National Disability Insurance Scheme is at stake unless ballooning costs are brought under control.
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The prime minister said the cost of the NDIS had blown out beyond initial maximum forecasts and was on track to surpass $26 billion next year and grow further beyond that.
"To ensure the NDIS is here for generations of Australians to come, we have a responsibility to manage increasing costs," Mr Morrison said in a pre-budget speech.
"Reasonable and necessary supports come with some boundaries - boundaries to ensure the scheme is affordable, but more importantly so it is fair for all participants.
"At the moment the costs of the NDIS are increasing more than was ever contemplated or expected by those who first framed it."
The scheme supports almost 450,000 children and adults with the number expected to rise to 530,000 in coming years.
Last month, the government paused plans to introduce independent assessments for all NDIS recipients in response to widespread backlash.
But the prime minister said independent assessments must go ahead.
"Proposed reforms through independent assessments and personalised budgets are designed to make the NDIS fairer and more sustainable into the future," Mr Morrison said.
Next week's federal budget will include an extra $13.2 billion for the NDIS between 2021 and 2023-2024.
The Commonwealth government is responsible for 55 per cent of the costs for NDIS participants, with its share expected to increase to 58 per cent next year.
The escalating costs are due to increasing numbers of participants and higher than expected payments for support plans.
Australian Associated Press
