A warning has been issued about a fake letter sent to landholders in Victoria that suggests their property could be taken during the state’s treaty negotiations.

The First Peoples’ Assembly of Victoria issued an alert on Tuesday about a letter circulating in north western Victoria, which it said was designed to create fear about the reacquisition of land.

It was sent on behalf of assembly member Dylan Clarke, who said lies in the letter were designed to depict the group as something to be afraid of.

“Someone is going to extraordinary lengths to poison the goodwill and scare people about all the positive things we can achieve together on the journey to treaty,” Mr Clarke said.

“It’s terribly sad and extremely frustrating.”

The fake letter, seen by AAP, includes several spelling errors and is typed on letterhead that includes the assembly’s logo.

The First Peoples’ Assembly of Victoria is an elected representative body for Aboriginal and Torres Strait Islander people which will begin statewide treaty negotiations later this year.

The letter claims the assembly is at the “next phase of reacquiring land” and tells landholders inspections would be carried out on their properties.

The letter also suggests landholders investigate their family history “to discover any Indigenous Ancestry (sic)” and “report any positive findings … this would very much go in your favour”.

Assembly co-chair Ngarra Murray said the letter was reported to Victoria Police and hit out at what she described as outright deception.

“These are illegal tactics designed to confuse people, when in reality treaty is going to benefit everyone who calls Victoria home,” Ms Murray said.

A genuine letter will be sent to landholders explaining treaty negotiations and Ms Murray urged people to seek information from the assembly’s website.