Indigenous leaders came to this former frontier town Thursday to hash out with Canadian officials a multibillion-dollar plan to fight poverty and disease on native reserves and settle damage claims for mistreatment.

Prime Minister Paul Martin, participating in the two-day summit along with the premiers of Canada's 13 provinces and territories, got a jump on talks Wednesday by proposing a $1.7 billion payment for aboriginal victims of sexual and psychological abuse during forced Christian schooling.

Some 100,000 children were required to attend such residential schools over the past century, and the sad history of their abuse has long been cited by Indian leaders as the root cause of epidemic rates of alcoholism and drug addiction on reserves.

Native reserves also are short 20,000 to 35,000 housing units, their high school graduation rate is just over half the national average, and life expectancy for Indians is five to seven years lower than for non-aboriginals.

Martin said tribal elders shared their problems with him when he toured Canada's vast northern frontiers last year.

"They would describe the high incidence of violence and abuse in the home; of disease and addiction, teen pregnancy and suicide," Martin said, adding there is an "unacceptable gap between the hopeful promise of youth and the experience of aboriginal adulthood."

Leaders of Inuit groups and the First Nations — the term used in Canada for Indian tribes — came from around the country for the unprecedented gathering on the day Americans give thanks for the help native peoples gave to early European settlers. Canadian Thanksgiving, which expresses gratitude for a bountiful harvest, is held in October.

"Without question, the summit is historically significant," Stewart Phillip, chief of the Penticton Indian band and president of the Union of British Columbia Indian Chiefs, said just before the summit opened with tribal ceremonies and traditional prayers.

"In many respects, the First Nations meeting represents a symbolic beginning to a 10-year process toward irradiating the deplorable and disgraceful social and economic conditions for First Nations communities in Canada," Phillip said.

The federal government currently spends upward of $6.8 billion a year for aboriginal groups, but problems abound.

Government sources said Martin was expected to announce Friday a plan to spend as much as $3.4 billion over the next five years to improve housing on native reserves and to boost health care, education and economic development for Canada's nearly 1 million indigenous people.

Martin also said he hoped to close the gap in education by developing a network of Indian-administered schools in cooperation with the provinces.

"Canada has a Third World in its front yard and back alleys," Phil Fontaine, national chief of the Assembly of First Nations and one of the key negotiators at the summit, wrote in the Canadian edition of Time magazine this week. "That is a national tragedy and an international embarrassment."

Still, Fontaine hailed Martin's proposal to set aside $1.7 billion for compensation payments and healing programs to atone for decades of abuse aboriginal children suffered when they were forced to attend residential schools meant to Christianize them. The proposal must be approved in court to cover more than 21 class-action lawsuits against the federal government.

Many are hoping the summit will be a historic turning point for the peoples who once helped European immigrants and fur traders survive the harsh northern climes.

Some worry, however, that any progress made at the conference could be washed away as early as next week, when opposition parties in Parliament are expected to topple Martin's minority government in a no-confidence vote forced after he refused to call early national elections.

If the school abuse deal is approved in court, survivors of rape, beatings and cultural isolation would likely be paid by the end of 2006, though the average abuse victim is now 60 and many are sick or dying. At least half of Canada's Indians are 25 or younger.

Fontaine, one of the first Indian leaders to go public with his own story of sexual and physical abuse at the Fort Alexander School in Manitoba, hailed Martin's proposal for a compensation program, but said he still wanted an official apology from the government.

The compensation plan is open to more than 80,000 former students who can apply to receive a minimum of $8,535, plus $2,560 for each year spent in the forced schooling.

Almost 15,000 people have sued for damages since the government acknowledged in 1998 that abuse was rampant in the schools. Before the program was ended, some 100,000 Indian children aged 4 to 18 were sent to Christian residential schools in nearly every province.

The Roman Catholic, Anglican, Presbyterian and United churches that ran the schools are part of the proposed settlement and will contribute "significantly," according to former Supreme Court justice Frank Iacobucci, who helped negotiate the settlement.

There will also be a truth and reconciliation forum to allow former students to share their stories about how the Christian schools tried to drum their native culture from their psyches in an effort to integrate aboriginal children into Canadian society.