Amnesty International has accused Brazil of failing to protect its indigenous population and set up long-promised reservations.
Amnesty is urging Brazilian authorities to settle land claims
In its 32-page report, the human rights group says the "very existence of Indians in Brazil" is threatened.
Several Indian leaders have been killed by ranchers over land disputes.
The report is a blow to President Luis Inacio Lula da Silva, who had pledged a "clear, democratic, objective and coherent" policy on indigenous peoples.
Most of Brazil's 700,000 Indians live in the Amazon rainforest.
The report, called "Foreigners in our own country", says that land rights are the most crucial issue.
"The removal of indigenous people from their tribal lands leaves them vulnerable to violence and chronic poverty and threatens their very existence in Brazil," said Dr William F Schulz, executive director of Amnesty International USA, in a written statement.
According to Brazil's 1988 constitution, 580 officially recognised Indian reservations should have been ratified by 1993.
But so far, only 340 have been created, and Amnesty says the necessary funds have not been allocated.
Most of Brazil's 700,000 Indians live in the Amazon rainforest
This has slowed down the process which, according to the Justice Ministry, should be completed by 2006.
This failure to demarcate the territories has allegedly exposed Indians to a variety of threats, such as disputes over the control of territories rich in diamond and gold deposits.
The Amnesty report has also denounced attempts to deprive Indians of acquired rights, such as a 2004 proposal that all land demarcations be re-evaluated by the Senate.
The plan fell through following international protests.
According to Amnesty, the government failure to act has led to the 2004 massacre of 29 Amazon prospectors by Cinta Larga Indians as well as the murder of two Indian leaders in 1998 and 2001.
Amnesty has called on Brazil to resolve current land disputes and take concrete steps to put an end to human rights abuses against Indians.