How do you make the leap from taking classes with a fashionable yoga teacher to accepting she is your spiritual master and Jesus Christ reborn? It seems far-fetched, but it’s straight out of recent Australian history.

In 1960s Melbourne, Anne Hamilton-Byrne – a glamorous purveyor of yoga to bored, wealthy suburban mums – began to form a cult around herself, gathering her adult followers (who numbered perhaps 500 at its peak) into a close-knit community in the Dandenong Ranges, and maintaining a property at Lake Eildon for her “children”.

Those children – a passel of cherubic kids, many with dyed blond hair, and some of whom were adopted under suspicious circumstances – became the most resonant image of Hamilton-Byrne’s organisation, The Family (originally named the Great White Brotherhood) when it entered the public consciousness. But their neat Von Trapp family appearance concealed a fearful existence.

“It’s a quantum leap, isn’t it,” says journalist Chris Johnston, co-author of a new book on the group. He says the success of Hamilton-Byrne’s bizarre gambit, and her group’s unlikely half-century-long existence, comes down to a “perfect storm of factors”, not least of which is the eruption of new age-style soul-searching into the id of Menzies-era Australia.

Hamilton-Byrne’s creed was a hodgepodge of world religions and miscellaneous esoterica (including UFOs), but hinged mostly on her personal charisma – her sermons are unintelligible to the uninitiated. She collected 10% of her followers’ incomes and amassed a fortune – including homes in Britain and New York – while encouraging them to engage in frauds, forgeries, spousal swaps and scam adoptions. At her Lake Eildon property, Kai Lama (or “Uptop”), her enforcers, the fearsome “Aunties”, kept her children under a strict and allegedly abusive regimen until 1987, when police raided the home and removed the kids.

‘There are people out there who probably have a lot to answer for’: five boys with bleached-blond hair who believed they were Anne and Bill Hamilton-Byrne’s children. Photograph: Label Distribution

“I think LSD helped,” says the book’s other author, documentarian Rosie Jones. “That was a really big part of the cult.” One of Hamilton-Byrne’s important early acolytes was psychiatrist Howard Whitaker, a researcher in the use of psychedelics to treat mental illnesses, who helped funnel drugs to the group. (The Family eventually staged a silent takeover of a private hospital in Kew, where Whitaker worked.) Hamilton-Byrne herself supposedly kept a jar full of LSD blotters at her home in the hills, and would personally guide her followers through their “trips”, thereby ensuring their acceptance of her divinity.

Johnston and Jones’s new book, The Family, is a companion to Jones’s feature documentary, which arrives in theatres this month. The pair have delved into the history of the cult, collecting testimonies from former acolytes and associates, as well as the police detectives who laboured for years to defang its operations. Their reporting sheds light on how Hamilton-Byrne managed to collect followers and keep them in thrall, and what has become of her cult today.

Jones hopes the book and film will provoke a new public discussion about the cult – not just recognition (and perhaps compensation) for its victims, but a reckoning on the part of the authorities that let it flourish.

“The really interesting thing about this group is that it wasn’t a bunch of hippies with flowers in their hair: they were middle class; they were highly intelligent; they were successful in their careers,” Jones says. Hamilton-Byrne pulled prominent doctors, psychiatrists and scientists into her orbit. Another early follower was British-born physicist Raynor Johnson, master of Queen’s College at the University of Melbourne. His social circle included founders of the Liberal party and Ansett airline.

That high-society respectability lent an air of intellectual probity to The Family’s formation – and, in some instances, helped suppress public scrutiny. Jones and Johnston report that Sir Reginald Ansett is said to have quashed negative coverage of the group on his TV station ATV-0 (now Channel Ten), and there are intimations of conspiracy (or at least callous inaction) on the part of judges and even a state premier.

“The tentacles of this cult were incredibly wide,” Johnston says. “There were tentacles into pretty much every aspect of Melbourne society through the 70s and 80s, and there are people out there who probably have a lot to answer for.”

Anne Hamilton Byrne, her husband William (left) and a friend arrive at Melbourne’s county court in November 1993. Photograph: John Woudstra/The Age

Anne Hamilton-Byrne herself, now in her mid-90s and afflicted with dementia, lingers halfway between life and death, and beyond the grip of the law. But her affect on her followers is ongoing: not only on her former “children” who bear the scars of their traumatic childhood, but on those lonely few who still carry a torch for the Great White Brotherhood.

Jones and Johnston spent time with a man named Michael, who claims The Family is still a going concern. He says he visits Anne nearly every day in her nursing home, and that the group still holds weekly meetings at their headquarters, the Santiniketan Lodge in the Dandenong Ranges. But both authors find that hard to believe. “I think it’s probably 30 or 40 people in the hills, at the most,” says Jones. “And I don’t know how active they are. But there are certainly people who support Anne still.”

Johnson adds: “I think the corporate structure is quite active, in terms of people who have specific power of attorney and who have legal guardianship over her. That’s a very real thing, and that’ll come into play when she dies.”

If there’s an epilogue yet to come in the story, it’s the looming legal contest over Hamilton-Byrne’s substantial estate – valued in the multiple millions – which is sure to flare up in the wake of her passing. That death, says Jones, “can’t be too far away. Unless she is Jesus Christ, as claimed”.

• The book The Family is released by Scribe Publications on 13 February; the film The Family screens in select theatres in Melbourne from 23 February