After more than seven decades of exploitation and a 10-year struggle for justice, Ireland on Tuesday admitted its role in the enslavement of thousands of women and girls in the notorious Magdalene Laundry system, but stopped short of issuing a formal apology from the government.

A long-awaited report headed by Senator Martin McAleese said there was "significant state involvement" in how the laundries were run – a reversal of the official state line for years, which insisted the institutions were privately controlled and run by nuns.

But the Irish Premier Enda Kenny's failure to give the women and their supporters a full, formal, public apology in the Dail on Tuesday afternoon has infuriated the victims and their supporters, who said such an approach risked undermining Ireland's attempt to right a historic wrong. Instead Kenny stated his "regret" about the stigma hanging over the women.

"The stigma that the branding together of all the residents, all 10,000, in the Magdalene Laundries, needs to be removed, and should have been removed long before this," Kenny said. "And I really am sorry that that never happened, and I regret that it never happened."

Claire McGetterick of the Justice For Magdalenes group said last night: "Frankly their country has failed them again".

Labelled the "Maggies", the women and girls were stripped of their names and dumped in Irish Catholic church-run laundries where nuns treated them as slaves, simply because they were unmarried mothers, orphans or regarded as somehow morally wayward.

Over 74 years, 10,000 women were put to work in de facto detention, mostly in laundries run by nuns. At least 988 of the women who were buried in laundry grounds are thought to have spent most of their lives inside the institutions.

McAleese and his co-authors said they hoped the report would bring "healing and peace of mind to all concerned, most especially the women whose experience of the Magdalene Laundries had a profound and enduring negative effect on their lives".

"The majority of women who engaged with the committee spoke of the hurt they felt due to loss of freedom. They were not informed why they were there, they had no information on when they could leave and were denied contact with the outside world," said the report, adding that the Gardaí "brought women to the laundries on a more ad hoc or informal basis".

Among the key findings were:

• Over a quarter of the women, at least 2,500, who were held in the Magdalene Laundries for whom records survived were sent in directly by the state.

• The state gave lucrative laundry contracts to these institutions, without complying with Fair Wage Clauses and in the absence of any compliance with Social Insurance obligations.

• The Gardaí pursued and returned girls and women who escaped from the Magdalene institutions.

The report concluded there was no physical or sexual abuse by nuns or others on their charges, some of whom were only girls as young as 12.

Stephen O'Riordain, who made a film about the victims of the laundry system and speaks for Magdalene Survivors Together, said ex-inmates were "completely surprised" by the Taoiseach's stance in the Dail. "I don't think sorry is enough for these women who were seeking a fulsome, public apology. I feel he has let us down as a leader of the country.

"There was also a lot of disappointment that the report said there was no physical abuse which is something our members would completely dispute. Nor should we underestimate the impact of psychological abuse," he said.

O'Riordain said he hoped the government was not trying to "water down" the import of the findings and the Magdalene women's testimony.

The report only deals with the laundries between the foundation of the Irish state, in 1922, and when the last one closed in 1996, although they have a much longer history. Half of the women incarcerated in these institutions, which washed clothes and linen from major hotel groups and even the Irish armed forces, were under the age of 23.

The Justice for the Magdalenes group said it was time for a compensation scheme to include "the provision of pensions, lost wages, health and housing services. Magdalene survivors have waited too long for justice and this should not be now burdened with a complicated legal process or closed-door policy of compensation."

The inquiry into the Magdalene scandal was prompted by a report from the UN Committee Against Torture in June 2011. It called for prosecutions where necessary and compensation to surviving women.

Maureen Sullivan, 60, said: "I feel that they are still in denial, but other parts of this report clearly state that we were telling the truth," she said.

• This article was amended on 13 February 2013. The original said that 30,000 women were sent to the laundries and that they were established in 1922. These errors have been corrected.

The victims

Maureen Sullivan was first sent to the Good Shepherd Magdalene Laundry in New Ross, County Wexford, in 1964. Two years later she was moved to Athy and finally to Dublin. She left in 1969.

"I was 12 years of age and my father had died, my mother had remarried and my home situation was abusive.

"They told me I would have a great education and I went off to New Ross from my primary school, actually in a laundry van. When I arrived there they took my books from me that my mother had bought. That was the last I saw of them; that was the last time I had a decent education. From then on it was laundry every day, where it was horrible, where you were not allowed to talk to anyone. All it was there in the laundry was work, work, work.

"There was physical abuse where they would dig you in the side with a thick cross off the rosary beads, where you got a thump on the side of the head and where there would be constant putting you down, shouting, verbal abuse. You got the cross in the side of the ribs if you slowed down on your way around the laundry.

"[The nuns] ate very well while we were on dripping, tea, bread. I remember another torture – one when we were all hungry – we could smell the likes of roast beef and cooked chicken wafting from where the nuns were eating. That was like another insult."

"I had no education, no means of applying for a job and for several years I was on the streets. It wasn't until I tried to take my own life in the 70s that I went for counselling and then it all came back, all the abuse and exploitation I had suffered in those places."

Mari Steed is a second-generation victim of the Magdalene Laundry system. Her mother, Josie, was transferred from an orphanage to Sundays Well laundry, Co. Cork, when she was 14. She was there from 1947-57. Mari became a third-time victim of the system because she, too, eventually gave up her daughter to a Catholic charity in the US in 1978.

"She lost me to adoption after spending the first two decades or more of her life in these institutions. So when she was released into the world she was vulnerable and susceptible to any man that paid her attention. She was in her mind 10 years old rather than a mature woman. And as fair prey, she found herself pregnant and then got sent down to a home for single mothers and was forced to give me up.

"It was a generational chain reaction and … a cycle we see often in the Magdalene woman. The vicious cycle tends to continue.

"It was slightly less miserable than what my mother experienced, but it was still pretty bad with a lot of stigma, a lot of shame. This was the chain reaction going on.

"I tracked my mother down in the early 1990s and she was open at long last to talk. She had had no other children because she feared having any more. She told me right out: "Mari, I was just so afraid that if the nuns didn't take another baby then God would.' So out of fear she and her husband decided not to have any more children."