The late Queen Elizabeth II’s portrait will be removed from Australia’s $5 note and replaced with an Indigenous design – in a move that has sparked scorn from the Opposition Leader.

The Reserve Bank has decided to update the note to feature a new design that “honours the culture and history of the First Australians”.

“This new design will replace the portrait of Her Majesty Queen Elizabeth II,” the bank said in a statement on Thursday.

“The other side of the $5 banknote will continue to feature the Australian parliament.”

It said the decision followed consultation with the government, which supported the change.

On Sydney radio on Thursday, Opposition Leader Peter Dutton called on Prime Minister Anthony Albanese to “own” the change – and compared it to division over issues such as Australia Day and the national anthem.

“There’s no question about this that it’s directed by the government and I think the Prime Minister should own up to it,” he told 2GB.

“I think it’s another attack on our systems, on our society and our institutions.

“I just think you’ve got to stand up and a lot more Australians have to be heard. I know the silent majority don’t agree with a lot of the woke nonsense that goes on – but we’ve got to hear more from those people online, and business leaders have to speak up against it as well.”

Shortly after the Queen’s death in September, Assistant Treasurer Andrew Leigh hinted at a looming change. He said it was not a requirement for Australia’s banknotes to featuring the reigning monarch.

“It’s a conversation that will take place in government, there’s no rush about it,” he said.

“The priority now is changing over the coins, which is a much larger operation.”

The Australian Monarchist League slammed the government on Thursday for “trouncing Australian democracy”. It said it had provided the parliament with a petition with more than 3000 signatures urging for the king’s image to go on the note.

“It is virtually neo-communism in action,” it said in a statement.

“President Xi [Jinping] could possibly learn a few tricks from our Prime Minister.”

Australian Republic Movement chair Craig Foster said Australians deserved to see themselves and “only themselves” in national symbols including money.

“To think that an unelected king should be on our currency in place of First Nations leaders and elders and eminent Australians is no longer justifiable at a time of truth telling,” he said.

The current $5 banknote will continue to be issued until the new design is introduced. It will remain legal tender even after that.

Hundreds of millions of $5 banknotes and 15 billion decimal coins featuring the late monarch remain in circulation across Australia.

“The $5 banknotes featuring the image of Her Majesty The Queen can continue to be used. They will not be withdrawn and are likely to remain in circulation for years to come,” the RBA said last September.

The late Queen once graced the now-discontinued $1 paper note, and had long featured on the $5 banknote.

The Reserve Bank said it would consult with Indigenous groups on a design for the new $5 banknote. It expected it would take several years for the new note to be designed and printed.

Rejuvenated five-cent, 10-cent, 20-cent, 50-cent, $1 and $2-coins – featuring an image of the King’s head – are expected to go into circulation sometime this year.

Britain has already revealed its new coins with the King’s image. They are expected to be in circulation soon.

– with AAP