The Government is to establish a compensation tribunal for people who were abused as children while staying in orphanages and industrial schools.
The tribunal could mean the payment of millions of pounds to several thousand eligible people.
It is expected the organisations concerned, primarily the Catholic Church, will be asked to make a financial contribution towards the payments. However, it would apparently not be possible to compel them to do so.
Last week the chairwoman of the Commission to Inquire into Child Abuse, Ms Justice Laffoy, said her work was threatened by the Government's failure to act on compensation and legal representation for victims.
That commission was established on a statutory basis last April to examine the abuse of children in State-run and religious institutions.
Solicitors representing victims of abuse had been demanding a scheme similar to the Hepatitis compensation tribunal. The adhoc group of solicitors for up to 1,200 survivors had effectively threatened to advise their clients to boycott the commission unless their demands were conceded.
The Minister for Education and Science, Dr Woods, said yesterday the Government had agreed in principle to establish the body to compensate people who as children were victims of abuse while in the care of institutions in which they were resident and in respect of which State bodies had regulatory or supervisory functions.
He said abuse for the purpose of such compensation would be defined as in the Commission to Inquire into Child Abuse Act, 2000, and the compensation would be paid on an ex gratia basis without the need to establish liability on the part of State bodies, but subject to a claimant establishing to the satisfaction of the tribunal that they had suffered abuse and resulting damage.
He said the issues concerning the establishment, funding and operation of a compensation body would be subject to further consideration and decision "in the near future".
Dr Woods said the Government acknowledged the difficulties many victims of abuse would have if they were left to pursue their claims in the courts. This would involve long delays, distress caused by recounting traumatic events and great uncertainty as to the outcome.
"It is right that the State should now offer to victims of abuse in childhood a quicker and less demanding process for the award of compensation for the damage they have suffered," said Dr Woods.
Last night Mr James McGuill, a solicitor for a group of survivors, welcomed the announcement and said it paved the way for a comprehensive inquiry by removing the compensation issue as an obstacle to its work.
"This will come as a very significant relief to survivors that the State is to acknowledge the pain that they and their families have suffered," he said. The levels of compensation awarded should be equal to that awarded in the civil courts.