"The truth is, this is an ugly story. The truth is, great evil has been done"
"We come together today to offer our nation's apology," Rudd said at a ceremony in Canberra on Monday, speaking before about 1,000 victims of abuse.
"To say to you, the 'forgotten Australians', and those who were sent to our shores as children without their consent, that we are sorry.
"Sorry that as children you were taken from your families and placed in institutions where so often you were abused. Sorry for the physical suffering, the emotional starvation and the cold absence of love, of tenderness, of care.
"Sorry for the tragedy, the absolute tragedy, of childhoods lost. Childhoods spent instead in austere and authoritarian places where names were replaced by numbers, spontaneous play by regimented routine, the joy of learning by the repetitive drudgery of menial work."
The apology follows a 2004 inquiry by the Australian senate which unearthed hundreds of stories of children placed in care due to family breakdown, because their mothers were unmarried or because they were considered uncontrollable.
Among those in the audience for Rudd's speech was John Hennessey, 72, of Campbelltown near Sydney.
At the age of six he was shipped from a British orphanage to an institute for boys in the remote country town of Bindoon in Western Australia.
Six years later he was he was stripped naked and nearly beaten to death by the headmaster for eating grapes he had taken from a nearby farm because he was hungry.
"What terrified me most was that in my mind I thought: 'that's my father; what's he doing?'", Hennessey told the Associated Press.
"I had nobody else and he was the one I'd looked up to."
The senate investigation found evidence of widespread assault and emotional, physical and sexual abuse, as well as neglect, humiliation and the deprivation of food, education and medical care.
Thousands of survivors continue to suffer mental and other health problems, including drug and alcohol abuse, while others are believed to have committed or attempted suicide.
Many of the children were told falsely that they were orphans, although most had either been abandoned or taken from their families by the state.
In many cases siblings were split up once they arrived in Australia.
"The truth is, this is an ugly story. The truth is, great evil has been done," Rudd said in his address on Monday to survivors.
Rudd's apology has already made waves in Britain where Gordon Brown, the UK prime minister, plans to issue a formal government apology to thousands of British child migrants forcibly sent overseas.
An estimated 130,000 poor British children were shipped to Australia, Canada and other former colonies over a time span of more than three and a half centuries.
Some of the children were as young as three years old.