Prime Minister Gordon Brown has apologised for the UK's role in sending more than 130,000 children to former colonies where many suffered abuse.
He expressed regret for the "misguided" Child Migrant Programme, telling the Commons he was "truly sorry".
He also announced a £6m fund to reunite families that were torn apart.
The scheme sent poor children for a "better life" to countries like Canada and Australia from the 1920s to 1960s, but many were abused and lied to.
'Deportation of innocents'
Mr Brown said: "To all those former child migrants and their families... we are truly sorry. They were let down.
"We are sorry they were allowed to be sent away at the time when they were most vulnerable. We are sorry that instead of caring for them, this country turned its back.
HISTORY OF UK CHILD MIGRANTS
UK is the only country with a sustained history of child migration - over four centuries
In 1618, 100 sent from London to Richmond, Virginia
In total 130,000 sent from the UK to Canada, New Zealand, South Africa, Zimbabwe (formerly Rhodesia) and Australia
Post-war, 7,000 shipped to Australia and 1,300 to New Zealand, Rhodesia and Canada
"And we are sorry that the voices of these children were not always heard, their cries for help not always heeded. And we are sorry that it has taken so long for this important day to come and for the full and unconditional apology that is justly deserved."
He also said they were cruelly lied to and their childhoods "robbed", and described the scheme as "shameful" and
"a deportation of the innocents".
More than 130,000 children, aged between three and 14, were sent to Commonwealth countries.
As they were shipped out of Britain, many were wrongly told their parents were dead, while parents were given very little information about where their children were going.
The former child migrants have told how on arrival they were separated from their siblings, and put into foster homes, state-run orphanages and religious institutions. Others were educated only for farm work.
'Moment in history'
Many were subjected to brutal physical and sexual abuse by those who
were meant to be caring for them.
Tony Costa, who grew up in orphanages in the UK until he was sent to
Australia aged 12, said: "I would often cry myself to sleep, many a night.
And we were there until we were 16 years of age.
"To this day, in the early hours of the morning, it's nothing uncommon for
me to wake up in a sweat, thinking of my time whilst in these institutions."
Conservative leader David Cameron said the programme had been
operated by all political parties and Mr Brown's apology was on behalf
of "all of us".
He said: "It is hard to believe that this went on for so long, that the
last children sailed in 1967 after most of us in this House were born.
"Anyone who studies what happened, systematically and for so long, will
be profoundly shocked at the splitting of families, the lies and abuse that took place, the official sanction which made it possible, and the heartache which it caused."
Liberal Democrat leader Nick Clegg said the apology would never heal the "extraordinary" pain but hoped it would start to atone for the "shameful episode in our history".
Until now, no British prime minister has ever delivered an official apology, despite repeated demands from victims' groups.
Last week, Britain's High Commissioner to Australia, Baroness Amos, said the apology would be an "important milestone".
"We want not just to bear witness to the past but to look forward to a future where these terrible events will not be repeated," she said.
Australian MP Steve Irons, who played a part in lobbying for Canberra's 2009 apology, also welcomed the UK move.
He said the abuse would never be forgotten, but it was an important part of the healing process for victims to hear the government believed them and was sorry.
Mr Brown said the child migrants themselves were consulted about the form the apology took.
Did you also know... that 310 Maltese child migrants were sent to Australia?
In 1928 Perth-based Maltese priest Father Raphael Pace urged the
Christian Brothers to include Maltese children in its emerging migration
scheme. Negotiations between the Maltese and Western Australian
Governments continued through the 1930s but the first Maltese child
migrants did not arrive in Australia until after World War II.
Between 1950 and 1965, 259 boys and 51 girls were sent to Catholic
institutions in Western Australia and South Australia.
Most parents believed their children would receive a better
education in Australia. Instead many were put to work on the
Christian Brothers’ building projects and left to endure the same
punishments and abuses as their British counterparts. Some were
forced to stop using their Maltese language and never learned to
read or write English.