The action is being brought against the Fairbridge Foundation, the State of NSW and the Commonwealth of Australia, with the complainants alleging sexual assaults by members of staff and persons to whose care they were entrusted; a poor-quality education which left many illiterate; and general humiliation and a lack of care.

Central to the class action is the allegation that the foundation and both the state and federal governments allowed a system of institutional abuse to develop at the Molong Farm School over several decades, which has resulted in lifelong psychiatric and physical injuries to former residents. More than 65 former residents are already supporting the class action.

Slater & Gordon lawyer Ken Fowlie said the class action was a "last resort" after years trying to reach an out-of-court settlement.

"It is very disappointing. Former residents of the Molong Farm, who have already endured so much, now have to go through a long and difficult legal fight to win justice," Fowlie said.

"Despite recent Senate inquiries recommending the creation of an out-of-court scheme to compensate victims, our clients have been left with no choice but to go to court to seek justice. The time has come for the Fairbridge Foundation and the state and federal governments, which all played critical roles in this misguided program, to recognise the suffering these people went through and still endure, and to do the right thing."

Fowlie said he is calling on the foundation and governments to engage with them to resolve the cases and to allow his clients to get on with their lives.

For much of the 1900s, the British-based Fairbridge Foundation sent children from the United Kingdom to Australia, Canada and Rhodesia for resettlement, mostly without their parents.

Between 1938 and 1974, hundreds of children, some as young as four, were sent from England to the Fairbridge Farm School in Molong. The Immigration (Guardianship of Children) Act placed legal guardianship for the children with the Federal Minister for Immigration, who in turn transferred custodial responsibility to the State of NSW Child Welfare Department.

The class action covers all residents at the Molong Fairbridge Farm School for any period between 1938 and 1974 who were physically or sexually assaulted and who have suffered a relevant injury, including post-traumatic stress disorder, anxiety or some other form of psychiatric or physical injury.