Mr Lloyd said he believed that the site had been hijacked in recent times by people with interests that departed from the original intent of the embassy as a symbol of indigenous Australians’ fight for land rights.
The tent embassy is a makeshift structure that was set up on the lawn’s of Old Parliament House amid violent protests in 1972.
It became recognised as a permanent site in 1992.
Over the past three decades, though, there have been repeated attempts by governments to tear it down and move embassy residents on after complaints the site is an eyesore and an international embarrassment.
According to the Associated Press news agency, it has been revealed that a new consultation process is looking at whether the existing structure should be bulldozed and replaced with a permanent building to recognise the history of indigenous Australians.
Mr Lloyd said that three places on a six or seven member committee had already been decided.
Ngunnawal elder and original embassy protester, Matilda House, has taken up one of the spots, along with National Indigenous Council member, Warren Mundine.
Both have expressed their opposition to how the tent embassy currently operates.
“If you’re just there living for the sake of living there, then who do you think you are? Move on,” Ms House reportedly told ABC television.
“You can put it down to just being pure, plain ignorant, but just coming and doing, as Aboriginal and non-Aboriginal people have been doing, is being very disrespectful to the people of this country,” she added.
Former ATSIC Tasmanian Commissioner Rodney Dillion has been named as the third committee member.
The territories minister said that input from embassy residents would still be invited, but that he could not guarantee a place for a representative on the committee.
“The problem is identifying who are actually the leaders of those who are residing at the tent embassy,” Mr Lloyd told ABC radio.
However, embassy resident and original protester, Denis Walker, has demanded that no changes go ahead without the approval of residents.
“Without consent, no go,” he said.
ACT Chief Minister Jon Stanhope has backed the process.
“I support the approach that he’s (Mr Lloyd) adopted which is consultative, is respectful and I think is a genuine attempt to determine the views of Canberrans, Australians and particularly indigenous people,” Mr Stanhope said.
The consulting company, Mutual Mediations, is due to report back to Mr Lloyd by the end of October with its recommendations for the future of the Aboriginal icon.