Children were cut off from families and some falsely told they were orphans in programme that sent 150,000 abroad between 1920 and 1967

Gordon Brown is to offer a formal apology to tens of thousands of British children forcibly sent to Commonwealth countries during the last century, many of whom faced abuse and a regime of unpaid labour rather than the better life they were promised.

The prime minister plans to make the apology in the new year after discussions with charities representing former child migrants and their families, a Downing Street spokeswoman said today.

In a letter to a Labour MP who has campaigned on the issue, Brown said that the "time is now right" for an apology, adding: "It is important that we take the time to listen to the voices of the survivors and victims of these misguided policies."

Government records show that at least 150,000 children aged between three and 14 were taken abroad, mainly to Australia and Canada, in a programme that began in the 1920s and did not stop until 1967.

The children, almost invariably from deprived backgrounds and already in some form of social or charitable care, were cut off from their families or even falsely informed that they were orphans.

While their parents were told the child migrants had gone to a better life, in many cases they remained in institutions or were sent to farming families and treated as unpaid labour, and many faced abuse. A key subtext to the programme, particularly in relation to Australia, was the aim of supplying Commonwealth countries with sufficient "white stock".

Brown's apology follows other recent government expressions of regret for past policies now seen as inhumane. Soon after Tony Blair took power in 1997, Blair apologised to Irish people for the country's potato famine 150 years before. Ten years later he expressed sorrow for the UK's role in the slave trade, although his words fell short of the unconditional apology demanded by campaigners.

While some critics dismissed these as meaningless stunts given the passage of time involved, many of those sent away as part of the Child Migrants Programme are still alive, with about 7,000 living in Australia alone. Sandra Anker, who was sent there from Britain in 1950, aged six, told the BBC she remained deeply angry at what had happened.

"Why I was sent out is beyond me. I don't understand it. I was deprived of my rights as a British citizen and I feel the British government have a lot to answer for," she said. "We've suffered all our lives. For the government of England to say sorry to us, it makes it right. Even if it's late, it's better than not at all."

News of Brown's move came as Australia's prime minister, Kevin Rudd, this morning made a wider apology to the estimated 500,000 children, many from overseas, who were held in orphanages and other institutions around that country between 1930 and 1970. Rudd – who in 2008 made a landmark apology to the so-called "stolen generations" of aboriginal children forcibly removed from their parents – addressed about 900 former child migrants at the parliament building in Canberra.

He apologised to thousands of British children who suffered abuse and neglect after being shipped to Australia. "We are sorry," Rudd said. "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."

The British high commissioner in Australia, the former Labour minister Lady Amos, said the next stage would be for the government to work with the Child Migrants Trust, which campaigns on the issue, on a wording for the apology. The trust's founder, Margaret Humphreys, is in Canberra to hear Rudd's apology. She said: "This is a significant moment in the history of child migration. The recognition is vital if people are to recover."

The issue of the UK child migrants was investigated in 1998 by the Commons health select committee, a process which led to the Department of Health drawing up guidance for families to trace those sent away. Kevin Barron, the Labour MP who chairs the committee, said he had received a letter from Brown outlining the planned apology and was "very pleased".

Ed Balls, the children's secretary, said yesterday the child migrant programme was "a stain on our society".

"I think it is important that we say to the children who are now adults and older people, and to their offspring, that this is something that we look back on in shame," he said.

A health department document drawn up for migrants' families describes how a number of organisations, including Barnardo's, the Salvation Army, the Children's Society and some Catholic groups, were involved in sending children abroad.