People from across the shire joined councillors Heather Mutimer and Bill McClenaghan, chief executive Victor Szwed and other council staff to watch the historic occasion projected on a big screen.

Most were from Daylesford and Hepburn Springs but others came from Trentham, Creswick, Glenlyon and Moorabool Shire.

Shire resident Margaret Murphy said the apology was an important milestone.

"It was heart-warming to gather together in our town hall today with such a cross-section of the community to witness and honour parliament's apology.

"This was a momentous day in our history and I am proud that the council opened the doors and invited everyone to celebrate together.

"There was silence throughout the address and most of us there were moved to tears. I believe that Kevin Rudd's words were sincere and hope that healing action and further change will follow," Ms Murphy said.

Tears rolled from the eyes of some older members of the audience as Mr Rudd retold the perils of the stolen generation.

One 70-year-old woman who had lived in Moree, New South Wales, in 1959 said she had seen and experienced total segregation in Moree similar to the way African Americans were treated in the southern states of the United States.

"As a city girl I was horrified and was so glad I was able to vote in the 1960s to make our indigenous brothers and sisters equal," she said.

"Today is special to me and I am so proud that we finally have a Prime Minister who has the guts to say sorry to the stolen generation for all that they and their descendants have had to suffer," she said.

When Mr Rudd finished his speech the audience stood as one and applauded loudly.

The Aboriginal flag was flown alongside the shire's flag at the town hall's front door with the Australian flag flapping in a gusty wind on the roof.

About 50 people attended a similar event at the Daylesford Neighbourhood Centre.