The Australasian Therapeutic Communities Association fears that funding for many services is "a house of cards" that will collapse if federal funding is cut or not renewed.
ATCA chair Gerard Byrne said its members, who provide residential therapy, outreach and day programs, were reporting increases in waiting lists and waiting times.
He warned that people's condition worsened when they did not get services.
"They turn up in hospitals, in police stations, in courts, in prison, in homeless services, in domestic and family violence services," he said.
"But they're not going there for the drug and alcohol problem - they're going there because all of those other things were happening for them because they couldn't get the drug and alcohol service."
ATCA executive officer Michelle Ridley said half a million Australians needing drug and alcohol treatment were missing out, and the issue was most acute in regional and remote areas.
"There is significant uncertainty about future funding for the sector and without confirmation of ongoing funding, some services undoubtedly face very hard decisions about their future admissions," she said.
"Our members are operating in an environment of significant pressure due to increasing demand for alcohol and other drug treatment services, workforce challenges, and uncertainty about future funding arrangements.."
Following a review of the federal Drug and Alcohol Program, the federal government extended existing grants until the end of June 2027.
Mr Byrne said the sector needed the grant opportunities for the next round of three-year grant agreements to be released soon.
"The uncertainty is in what the future will be after the application process, because we're funded up until June 2027, but our members don't know what's happening after that," he said.
"DAP funding usually part funds programs along with the state and territory governments, so you get this house of cards situation where if you take one funding stream away or reduce it, the other funding streams are at risk because the financial sustainability is not there."
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