Western Australia's Aboriginal Legal Service will look at whether there is a case to sue the government over "disgraceful" living conditions at a remote community near the mining town of Newman.
Parnpajinya is one of six Pilbara town-based reserves facing an uncertain future after not qualifying for remote communities funding.
The Western Australian Government has been considering the settlement's future for the past two years as part of a $20 million project while houses in the area remain dilapidated with intermittent access to services like water and electricity.