Premier Roger Cook says the decision recognises the injustice suffered by Aboriginal and Torres Strait Islander workers and their families between 1936 and 1972 under WA laws.
"We hope this agreement can contribute to healing for those impacted," he said on Wednesday.
Senior Gooniyandi Elder Mervyn Street launched legal action in the Federal Court in 2020 on behalf of the surviving workers and their relatives.
The WA government agreed to up to $180.4 million to eligible Aboriginal workers or their surviving spouses and children, with each claimant eligible to receive $16,500.
A public acknowledgement and apology will be issued in state parliament to the surviving and deceased workers on November 28.
The settlement is yet to be approved by the Federal Court, which will happen after eligible workers and their families are registered.Â
The court will also decide the exact amount payable to each worker or their family.
Mr Street intends to ask that a greater amount be paid to people who worked the longest under the legislation.
Many of those were in the Kimberley region on pastoral stations and in institutions and missions.
Lawyer Vicky Antzoulatos said the agreement was a victory for the workers and their descendants who suffered intergenerational disadvantage because of the laws.
"It doesn't correct the past but offers a way forward," she said.
"Hopefully, greater understanding of the experiences of Aboriginal people in WA during this sad earlier time in history is also a lasting legacy of this class action."
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