Decades of allegations of child sexual abuse carried out in churches, schools, government-run hostels and foster homes will be investigated by a wide-ranging royal commission that is expected to run for years.
Prime Minister Julia Gillard announced the establishment of the commission yesterday in the wake of demands from victims' groups and the political spectrum for an inquiry.
While the Catholic Church is the most prominent group that will be examined about the treatment of children in its care, other religious organisations, public and private schools, State-run institutions such as hostels and not-for-profit groups such as the Scouts will also face scrutiny.
The response of police and State child protection authorities to allegations of sexual abuse will also be drawn into the inquiry.
The terms of reference will be finalised in coming weeks in consultation with victims' groups, churches and State governments, as will the appointment of a royal commissioner or commissioners.
Ms Gillard said the commission would begin taking evidence next year, focusing on the responses by institutions when confronted with child sexual abuse cases.
She said Australians did not want to see institutions turn a blind eye to or cover up claims of child abuse.
"Child sexual abuse is a vile thing, it's an evil thing, it's done by evil people," Ms Gillard said.
"But what we've seen too in recent revelations is not just the evil of the people who do it. There has been a systemic failure to respond to it and better protect children."
Before the PM's announcement, Opposition Leader Tony Abbott offered bipartisan support for a royal commission as long as it did not single out one institution.
Ms Gillard did not put a deadline on the royal commission, or a budget, but signalled it would take years to run by saying it would make regular reports to Parliament.
"To be frank, it will take quite some time," she said. "And I believe the time should be taken to get it right."
Ms Gillard said it would be up to the commission to decide how it would hear evidence from victims.
"Some people may want there to be the maximum public airing of what happened to them - that might be biggest healing that they could have," she said.
"For others, I imagine that standing somewhere public and telling their story would be their version of hell."
Ms Gillard would not be drawn on whether the commission would look at compensation for victims.
She said she did not want the commission to interfere with police investigations.
Cardinal George Pell, the most senior Catholic cleric in Australia, said last night that the Church would co-operate fully with the commission.
Calls for a royal commission had heightened in recent weeks as major investigations in NSW and Victoria got under way into child sexual abuse committed by Catholic Church figures.
A NSW policeman investigating paedophile priests last week accused the Church of still covering up crimes, while in Victoria sickening claims were made that boys as young as seven were drugged and pack-raped in homes where they were cared for by brothers in the Order of St John of God. In WA, an inquiry was held this year into how police and other authorities brushed off complaints about children being sexually abused at State-run hostels in Katanning and Northam.
As Cabinet deliberated on establishing a royal commission, a raft of politicians said it was the best way to end years of silence and cover-up.
Finance Minister Penny Wong said an inquiry should be "full, frank and fearless", while former prime ministers Kevin Rudd and Malcolm Fraser also voiced their support.
"There should be an open examination of what has occurred in the past, what further reforms are necessary for the future as well as addressing the key question of appropriate compensation for victims," Mr Rudd said.