Health Minister Mark Butler revealed the changes to the $50 billion scheme in a major address to the National Press Club on Wednesday.
As part of the changes, standardised assessments will be rolled out, with a list of diagnoses no longer the sole standard of access.
The government is aiming to reduce the number of people on the NDIS from about 760,000 now to 600,000 by the end of the 2020s, lower than forecasts of more than 900,000 at current rates.
An advisory group, the disability community, and states and territories will help formulate the eligibility tests.
Those who don't meet the benchmark for inclusion will be directed to other support services.
"(People have) been told this is the only program available or that this is the help their child needs," Mr Butler said.
"It is our responsibility to make sure that in the future, these Australians are pointed to the right place."
The minister also announced that changes will bring the average cost of plans down to $26,000 per year, from $31,000 in 2026.
The plan spend will be in line with levels from 2023.
While the minister said the government had been seeking to reduce growth of the scheme, spending will be reduced to two per cent each year over the next four years, before going back to five per cent in 2030.
Previous changes had sought to get spending down to eight per cent growth.
A $200 million fund will also be set up to rebuild capability in the disability sector among community organisations.
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