Ahead of a national roundtable in Canberra later on Monday, Ms Rishworth said eight jobs providers would be closed, while half of the country's 104 providers faced the prospect of being wound back.
The moves come amid a wide-ranging review of the sector.
Ms Rishworth said she was confident the more than 15,000 people with a disability affected by the decision to close providers would be transitioned to more effective services.
"I'm not going to make any apologies for standing by and watching what has been very poor performance over a long period of time continue to provide bad service for people living with a disability," she told Sky News on Monday,
"It was absolutely time to take action on this."
Ms Rishworth said it was critical the roundtable examine how barriers to people with disability finding employment could be removed.
"Businesses changing their mindset, changing some of their HR processes are really critical, and of course community changing their attitudes in how we support people living with a disability get a job," she said.
"There are a lot of people living with a disability that want to work, but have these barriers in front of them."
The decision will mean only the most effective disability employment services providers will continue to receive commonwealth funding.
It follows evidence before the Royal Commission into Violence, Abuse, Neglect and Exploitation of People with Disability.
The inquiry was told some DES providers were not achieving outcomes, with some job placements ending abruptly or only lasting the duration of government subsidies.
To support participants through transitions to new providers, their mutual obligations will be suspended for the next two months starting on Monday.
Almost 2.1 million people living with disability are of working age in Australia.
However 93 per cent of unemployed people aged 15-64 with disability experience difficulties in finding work.
The unemployment rate for people living with disability is more than double that of working age Australians.
14°C