The Northern Territory will seek to raise the age of criminal responsibility from 10 to 12 years old in what will be an Australian first.
The Labor government has introduced legislation to parliament arguing the reform will help break the cycle of youth offending.
At the same time, the NT opposition said it would "not stop a single crime".
The legislation will be debated next month and if passed, the Territory will become the first jurisdiction in Australia to make the change.
"The evidence is clear, the earlier a child enters the justice system, the more likely they are to reoffend," Attorney-General Chansey Paech said on Thursday.
"Punitive measures are not a deterrent for 10 and 11-year-olds. In fact, it is more likely to increase behavioural problems and offending.
"It's time to get smarter on our youth justice approach and break the cycle of youth crime."
Under the proposed laws, if a child 11 years or under commits an offence they and their families would be referred to intensive parenting programs, as well as behavioural change programs.
NT Police would continue to conduct investigations and respond to the needs of victims.
The reforms were widely welcomed though most welfare groups continue to lobby for the age to be raised to 14.
Northern Territory Council of Social Service chief executive Deborah Di Natale said locking up and traumatising children was not the answer to making the NT safer.
"I cannot think that anyone thinks that a 10-year-old being in jail is the right approach to problematic behaviour," she said.
Anglicare NT Chief Executive Dave Pugh said young people needed a justice system that was fair and understood the significant intergenerational trauma in the lives of families.
"We have learnt from deep experience that relationships, role modelling, and support create lasting change," he said.
"We have learnt that incarceration and penalties rarely turn lives around."
The Central Land Council said raising the age would help "shut the revolving prison door" on Aboriginal children.
"It's a long overdue and welcome step on the way to raising the age to 14 years, in line with more enlightened and civilised societies," council chair Robert Hoosan said.
"We should all be proud to become the first jurisdiction in Australia to not just pay lip service to, but actually legislate, raising the age of criminal responsibility."
But opposition youth justice spokesman Josh Burgoyne said the change would not prevent a single crime and was being proposed at a time when the community was drowning under a wave of youth offending.
"The community sees the impact of this offending on their businesses, on their livelihoods, and on their community and now we know there will be no consequences for serious offending against them," he said.
"We have a Labor government who don't want consequences for young people's actions, yet are failing to deliver the very programs that would keep them off the street."
In other legislative changes, the NT government will seek to reform mandatory sentencing laws for some offending, giving judges more scope to enforce behaviour change programs.
It will also bid to increase penalties for breaches of domestic violence orders.
