First Nations Canadians have won a landmark $20 billion ($22.6bn AUD) government settlement to compensate children and families subjected to the nation’s discriminatory child welfare system.

The bumper agreement, believed to be the largest in Canadian history stems from policies implemented between 1991 and 2017 which removed children from homes and failed to provide essential public services.

On Monday Assembly of First Nations Manitoba regional chief Cindy Woodhouse said the in-principle deal made earlier this year had now been finalised.

“First Nations children deserve to be surrounded by love and live free of discriminatory government policy, and after three decades of advocacy and months of negotiations, I’m proud to say on behalf the AFN that we have reached another historic milestone for our children and their and families,” she said.

“We’ve held our children in our hearts and prayers throughout negotiations, reaching an agreement that we believe fairly upholds the 2019 orders of the Canadian Human Rights Tribunal and broadens the scope of First Nations children and families eligible to seek compensation.

“The next steps are procedural and pending court approvals, we expect compensation will begin to reach First Nations next year.”

The two policies at the centre of the scandal are Jordan’s Principle, implemented in 2007, and the First Nations Child and Family Services program.

Jordan’s Principle was established after First Nations child Jordan River Anderson was born with medical needs that could not be treated on-reserve.

Jordan became subject to a dispute around in-home care costs which led to him being unable to return home before dying in 2005 aged 5.

The Principle, established two years later, sought to ensure all First Nations children could access public services on the same terms as other children.

However, those affected by what the government admitted was a “narrow definition of the principle used between 2007 and 2017 are now eligible for compensation as a result of the $20bn settlement.

So too are First Nations children on-reserve and in the Yukon removed from the homes between 1991 and 2022, children who did not receive an essential public service or faced delays in accessing such services between 1991 and 2007, and caregiving parents or grandparents of children covered by the agreement.

Canadian Indigenous Services Minister Patty Hajdu said the settlement should cover a minimum payment of $40,000 to those entitled to compensation.

“I am hopeful that the court process for approving the agreement will be quick, and people and families can have the certainty and resolution they have asked for,” she said.

A motion to approve the settlement is scheduled to be heard for at the Federal Court of Canada in September 2022.