In a new book, Lands of Shame, Hughes, a former senior director of the economic analysis department at the World Bank and senior fellow at the Centre for Independent Studies in Sydney, argues that after 1967, two main approaches towards Aboriginal people were emerging, one liberal and the other socialist.

"Those liberally minded considered that with the referendum's end to legislated exceptionalism, Aborigines and Torres Strait Islanders would be able to integrate into the economic mainstream," she writes. "It was thought that Aboriginal lives would be enriched by participating in the technological and social advances that led to high living standards."

Values such as individual freedom and equality between men and women were evolving. Immigration was leading to an ethnically plural society with a reduction in racial discrimination. Aboriginal art, dance and music were being embraced in a broader Australian culture, enabling indigenous traditions to flourish.

"Thus it was thought that Aborigines and Torres Strait Islanders would not only be able to look back to enjoy their traditions and links with the country, but also look forward to participating in the life of reason that would free them from sorcery and fear of spirits."

Instead, she writes, the Whitlam and Fraser governments steered Aborigines towards the socialist "homeland" model championed by former Reserve Bank governor HC "Nugget" Coombs that wove together anthropology and Marxism. Rather than ending discrimination, it would be "the culmination of 200 years of exceptionalist and separatist indigenous policies". Former prime minister Malcolm Fraser said last night it was "totally and absolutely absurd" to suggest his government allowed a form of apartheid to develop. He said his government had tried to "respect and understand the difference" between indigenous and non-indigenous people.

One of the leaders of the referendum campaign, Faith Bandler, said she had "tended to support" the Coombs approach, but generations of social engineering by governments had rarely taken account of Aboriginal opinion. "It's difficult for one group of people, whose skin is white, to plan and make decisions for another group, whose skin happens to be black," she said.

But confronting critics, including Mr Fraser, who say policies of assimilation and integration from the 1930s to the 1970s not only failed but contributed to the destruction of Aboriginal families, Hughes writes: "It is not true that various policies have been tried and have failed. Policies have always been discriminatory, treating Aborigines and Torres Strait Islanders differently from other Australians.

"Sadly, the most damaging discrimination in Australia's history has been the exceptionalism of the last 30 years that was intended to make up for past mistreatment."