Delicate negotiations are under way on copyright issues linked to the Aboriginal flag.
Indigenous artist and copyright holder Harold Thomas designed the flag in 1971 and non-Indigenous company WAM Clothing owns the commercial licensing rights.
The long-running issue of copyright licensing arrangements of the flag was the focus of a Senate inquiry on Monday.
The inquiry was told Aboriginal groups have been sent cease and desist warnings from WAM Clothing after using the flag, raising concerns licensing is putting the design in a corner.
National Indigenous Australians Agency boss Ray Griggs confirmed discussions have been under way with Mr Thomas and WAM Clothing since June last year.
He described the issue as "delicate, sensitive and complex".
"The NIAA is acutely aware of the sensitivity and complexity surrounding this issue in both the Aboriginal and broader Australian community," he said.
"The importance of the flag as a unifying symbol for Aboriginal Australians, and more broadly in the community, is a position all parties seek to preserve.
"These negotiations are based on goodwill and trust."
The Senate inquiry was recently launched after the issue came to the fore again due to the AFL.
The AFL refused to enter into an agreement with WAM this year to use the flag in the centre of the pitch for its Indigenous round.
AFL's head of legal Stephen Meade said the league took the step to draw attention to the issue.
The AFL was concerned the commercial terms being sought by WAM would preclude many smaller groups from using the flag.
The government wants the flag to be used more freely, while respecting Mr Thomas' wishes and the broader community.
Mr Griggs says the government wants to end divisiveness over the issue.
Indigenous Affairs Minister Ken Wyatt asked the Senate inquiry for public interest immunity, limiting information regarding discussions from being aired.
WAM Clothing director Semele Moore confirmed discussions were under way but was tight-lipped on the details.
"Harold has specifically requested those discussions remain confidential."
Ms Moore was unable to tell the inquiry how many companies have paid to use the flag design, or have been told to stop using it.
Australians can freely fly the flag but there are limitations to its use in other ways.
The inquiry has also been told the copyright could be split so it can be used more widely.
Copyright law expert Michael Green SC said the government could negotiate with Mr Thomas about splitting the copyright while keeping the current commercial rights in mind.