Prime Minister Anthony Albanese will issue the formal apology on November 29 in the House of Representatives.
It's estimated there are 146 thalidomide survivors in Australia who are registered with a support program, although the exact number affected by the morning sickness drug that caused birth defects is unknown.
The apology was one of the recommendations from a Senate report which was handed down in March 2019.
The report found that if the federal government had acted more quickly when thalidomide was linked to birth defects, 20 per cent of survivors may not have been affected.
Mr Albanese said the apology would be a long overdue national acknowledgement of what survivors had endured.
"The thalidomide tragedy is a dark chapter in the history of our nation and the world," he said.
"In giving this apology, we will acknowledge all those babies who died and the families who mourn them, as well as those who survived but whose lives were made so much harder by the effects of this terrible drug."
This 1965 photo shows a three-year-old girl born without arms to a mother who took thalidomide.
The day after the apology, a national memorial site will be unveiled on the shores of Lake Burley Griffin in Canberra, with the event to be attended by thalidomide survivors and their families.
The memorial was also a recommendation of the Senate report.
In November 1961, when thalidomide was linked to birth defects, federal and state governments took no action to ban the importation or sale of the drug.
A financial support package was unveiled by the federal government in 2020 for thalidomide survivors, which provided a one-off payment between $75,000 and $500,000, followed by ongoing annual payments between $5000 and $60,000.
Health Minister Mark Butler said he hoped the apology would help heal emotional wounds.
"So many mothers and their babies were let down by systemic failures that led to the thalidomide tragedy, and we should reflect and apologise for it," he said.
"It is difficult today to think a tragedy like thalidomide could happen, and it's a sobering reminder of our duty to put in place measures to protect people from harm."
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