Australia's PM Kevin Rudd has delivered a formal apology to Aboriginal people for injustices inflicted by successive governments, in an address broadcast across the country.

When Mr Rudd finished speaking, parliament stood to applaud and there were cheers outside from thousands of indigenous Australians who had descended on Canberra.

For many indigenous Australians this is a symbolic gesture of immense scale. The hope is it will usher in a new era of recognition and reconciliation.

Thousands of Aborigines had gathered for the occasion in the capital, setting up a tent city near parliament in Canberra.

The Chookie Dancers, a dance group from Elcho Island in the Northern Territory, performed in front of those who had come to hear the historic declaration.

Mr Rudd sat next to Ngambri elder Matilda House-Williams, wearing possum-fur, as parliament opened on Tuesday with an Aboriginal ceremony for the first time.

Mr Rudd, who was elected in November, has promised to make Aboriginal reconciliation central to his premiership.

But Aboriginal activists are demanding an end to increased police and government intervention in tribal parts of Northern Territory, which is meant to combat child abuse.

Activists have warned Mr Rudd they expect action on indigenous affairs to continue beyond the symbolism of the parliament's opening and the official apology.