Aboriginal, Torres Strait Islander, Indigenous
As Pam Peters remarks, in the 2007 edition of The Cambridge Guide To Australian English Usage, "Which term to use when you refer to one of the original inhabitants of Australia has been a fraught question. The Australian Government Style Manual has changed its recommendation with every edition since 1978, reflecting the sensitivity of the issue."
(Download page 10 of the Cambridge Guide (44KB pdf) which discusses the historical development of "Aborigine", "Aborigines" and "Aboriginal" here.)
The sixth edition of the Style Manual (the edition current at the time of writing) says of "Indigenous" (page 56):
Indigenous is a similarly useful, short generic reference covering all Aboriginal and Torres Strait Islander peoples. It is a subset of the broader term "Australian", and is widely acceptable for this purpose. However, the term "non-Indigenous" should generally be avoided as a way of distinguising between Australia's original inhabitants and other Australians, as it can be viewed as unnecessarily divisive.
Download a 396KB pdf of the Style Manual, page 57, here.
My experience is that people tend to avoid "Indigenous". It has the sense of government or corporate shorthand for those who find saying "Aboriginal and Torres Strait Islander people" too repetitive and too much of a mouthful (in the same way that, for a while, people of non–English-speaking backgrounds became reduced to NESBs).
Some people and organisations in the Northern Territory (such as the Desert Knowledge Cooperative Research Centre) have clearly asserted that the term "Indigenous" should not be used and that "Aboriginal" should be used when referring to NT-only Indigenous peoples. While there are people from the islands off the NT coast these people are not considered "Islanders" as such; this term is restricted to a shorthand for Torres Strait Islanders, or those people of Pacific Island descent who moved (voluntarily or coercively) to the islands and mainland of Queensland's far north.
The Little Red, Yellow and Black Book, published by Aborginal Studies Press, has this under the heading "What we call ourselves" (page 7):
Government officials and other people who want a word to include both Aboriginal and Torres Strait islander people use "Indigneous Australians" or "Indigenous peoples". This language is also used in the United Nations, who refer to Indigneous peoples from all around the world. When referring to ourselves, we use a variety of broad, regional "tribal" or linguistic labels. For example, those of use from New South Wales and Victorial might call ourselves Kooris, Queenslanders Murris, or, in the north, Bama, Tasmanians Palawa, South Australians Nunga and south-west Australians use Nyoongars (also Nyungar). (There can be different spellings to some of these words.) Those of us living on the coast call ourselves "saltwater" and others "freshwater" people. But many of us would rather be identified by a language label; for example, a Gurindji man or a Gubbi Gubbi woman. Torres Strait Islanders prefer to use the name of their islands to identify themselves to outsiders; for example, a Badulayg or a Meriam. Socio-political groupings are also common in the native title area — by definition these groups are bound by their laws and customs. This can be reflected in the use of the word "nations" or "peoples".
When referring to Australia's Indigenous peoples it is acceptable to say "Aboriginal people", "Torres Strait Islanders" or "Indigenous people". When written, these labels are capitalised. You may sometimes hear us referring to ourselves as "blackfellas" in a joking, non-derogatory way. However, we advise you not to use it unless you know your audience well.
The ever fruitful Wikipedia has this to say on its Aboriginal page:
The word aboriginal was used in Australia to describe its Indigenous peoples as early as 1789. It soon became capitalised and employed as the common name to refer to all Indigenous Australians. At present the term refers only to those peoples who were traditionally hunter gatherers. It does not encompass those Indigenous peoples from the Torres Strait who traditionally practised agriculture.
The word Aboriginal has been in use in English since at least the 17th century to mean "first or earliest known, indigenous," (Latin Aborigines, from ab: from, and origo: origin, beginning). Strictly speaking, "Aborigine" is the noun and "Aboriginal" the adjectival form; however the latter is often also employed to stand as a noun.
The use of "Aborigine(s)" or "Aboriginal(s)" in this sense, i.e. as a noun, has acquired negative, even derogatory connotations in some sectors of the community, who regard it as insensitive, and even offensive. The more acceptable and correct expression is "Aboriginal Australians" or "Aboriginal people," though even this is sometimes regarded as an expression to be avoided because of its historical associations with colonialism. "Indigenous Australians" has found increasing acceptance, particularly since the 1980s
It also has this under its Usage Notes:
In Canada, Aboriginal is most commonly capitalized (indicated by its status as the main headword in the Canadian Oxford Dictionary). The term has official status in the Constitution Act of 1982, and while recognizing that it is widely used otherwise, since 1994 the Government of Canada has recommended the word be always capitalized (like, for example, Asian, Hispanic, and Nordic) and that it be used as a modifier, not a proper noun. It is used in this way by the Canadian Hansard and the Canadian Oxford Dictionary.
The U.S. Chicago Manual of Style recommends to capitalize ethnic groups and their associated adjectives: "Aborigines; an Aborigine; Aboriginal art".
Once again, it's about context. I've worked with organisations (such as the DKCRC, mentioned above) that only use "Aboriginal", arguing that they simply do not deal with Torres Strait Islander people (and backing this up with Census figures!).
The full term "Aboriginal and Torres Strait Islander people" can be clumsy, but if the alternative "Indigenous" is deemed too generic then try to find out if there are alternatives such as those suggested in the Little Red, Yellow and Black Book. Ask the author and ask the publisher, find a standard that all parties are comfortable with and then apply it.