Aborigines remain the country's poorest and most disadvantaged group, and Rudd has made improving their lives one of his government's top priorities.
As part of that campaign, Aborigines were invited for the first time to give a traditional welcome Tuesday at the official opening of the Parliament session - symbolic recognition that the land on which the capital was built was taken from Aborigines without compensation.
The apology is directed at tens of thousands of Aborigines who were forcibly taken from their families as children under now abandoned assimilation policies.
"We apologize for the laws and policies of successive parliaments and governments that have inflicted profound grief, suffering and loss on these our fellow Australians," the apology motion says.
"To the mothers and the fathers, the brothers and the sisters, for the breaking up of families and communities, we say sorry.
"And for the indignity and degradation thus inflicted on a proud people and a proud culture, we say sorry."
The apology, which was certain to be passed since both Rudd's governing Labor Party and the main opposition parties support it, ends years of divisive debate and a decade of refusals by the previous conservative government that lost November's elections.
It places Australia among a handful of nations that have offered official apologies to oppressed minorities, including Canada's 1998 apology to its native peoples, South Africa's 1992 expression of regret for apartheid and the U.S. Congress' 1988 law apologizing to Japanese-Americans for their internment during World War II.
The reading of Australia's apology and the parliamentary vote was being broadcast nationally, and people across the country made plans for communal watching, from the Outback breakfasts to the school assemblies.
Giant television screens were erected outside Parliament House in Canberra for hundreds of people who could not fit inside. Screens were also set up in parks and other public places in Sydney and other state capitals.
Rudd's motion offered "a new page in the history of our great continent" and "a future where this Parliament resolves that the injustices of the past must never, never happen again."
Aborigines lived mostly as hunter-gatherers for tens of thousands of years before British colonial settlers landed at what is now Sydney in 1788.
Today, there are about 450,000 Aborigines in Australia's population of 21 million. They are the country's poorest group, with the highest rates of jailing, unemployment and illiteracy. Their life expectancy is 17 years shorter than other Australians.
The debate about an apology was spurred by a government inquiry into policies that from 1910 until the 1970s resulted in 100,000 mostly mixed-blood Aboriginal children being taken from their parents under state and federal laws based on a premise that Aborigines were dying out.
Most were deeply traumatized by the loss of their families and culture, the inquiry concluded, naming them the "Stolen Generations." Its 1997 report recommended a formal apology and reparations for the victims.
Rudd ruled out compensation - a stance that helped secure support for the apology among the many Australians who believe they should not be held responsible for past policies, no matter how flawed.
He pledges instead to lift the living standards of all Aborigines, and on Tuesday outlined bold targets for cutting infant mortality, illiteracy and early death rates among indigenous people within a decade.
Aboriginal leaders generally welcomed Rudd's apology, though some said it was empty rhetoric without addressing the issue of compensation.
Noel Pearson, a respected Aborigine leader from Queensland state, wrote in The Australian newspaper on Tuesday that offering an apology without compensation meant: "Blackfellas will get the words, the whitefellas keep the money."
Marcia Langton, an Aborigine academic at the University of Melbourne, also said the question of compensation must be addressed, but celebrated the apology as a huge step forward.
"I think that it's impossible to feel any kind of cynicism at all, if you can understand how much it means to people who have lived through these events and been removed from their families," she told Australian Broadcasting Corp.
Michael Mansell, spokesman for the rights group the National Aboriginal Alliance, said the word "sorry" was one that "Stolen Generation members will be very relieved is finally being used."
Mansell, who has urged the government to establish an $880 million compensation fund, said he still hoped Rudd would be open to the idea.
Bob Brown, leader of the minority Greens party, said he would try to have Rudd's motion amended in the Senate to include a commitment to paying compensation. But the amendment was likely to be rejected by majority parties, and Brown said he would not pursue it further.
Tony Abbott, the indigenous affairs spokesman for the main opposition coalition, said his bloc had reversed its previous objection to the apology in part because Rudd promised there would be no compensation.
"As far as the opposition is concerned, this apology creates no new rights or entitlements. We are guaranteed that by the prime minister," Abbott said.