Australia's first treaty legislation has been passed, marking a historic milestone following a late-night parliamentary debate.

The landmark legislation passed in the upper house of Victorian parliament late on Thursday, leading to cheers and celebrations in the public gallery.

Premier Jacinta Allan said the bill would be signed by the state government and First Peoples' Assembly in coming weeks.

"Treaty gives Aboriginal communities the power to shape the policies and services that affect their lives," she said.

Under the treaty bill, the state's Indigenous representative body will be made permanent and granted expanded powers.

It will act as a voice to state parliament that the government must consult on laws and policies affecting Aboriginal Victorians.

The body is named Gellung Wa

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