Health Minister Rona Ambrose says the money is tax free and intended to cover urgent health-care needs.
The long-awaited compensation package also includes a total of up to $168 million for ongoing medical assistance based on individual circumstances.
"I would like to express heartfelt sympathy and great regret for the decades of tremendous suffering and personal struggle that exposure to thalidomide has inflicted on survivors and their loved ones," Ambrose told a news conference in Edmonton Friday.
"No regret or sympathy and no amount of financial support can ever undo what happened.
"However, today we are announcing support that will help ensure that survivors receive the care they need to live the rest of their lives with dignity."
Ambrose said the support package would meet the needs of the 95 victims still believed to be living who are now in their mid-50s.
However, the mother of one severely disabled survivor was angry.
Anne Marie Bainbridge, 75, said her daughter Bernadette was expecting a payment of $250,000 — money the family needs to ensure that she can be properly looked after in the years to come.
"We are extremely disappointed. It is a slap in the face," Bainbridge said from her home in Whitby, Ont. "Ms. Ambrose should be thoroughly ashamed of herself."
Bainbridge said Bernadette, 52, suffered brain damage. The entire right side of her body was paralyzed. She has no right ear and deformed hands.
"I am just thoroughly disgusted with the way this has been handled."
Thalidomide was a government-approved anti-nausea drug prescribed to pregnant women in the 1950s and 1960s.
Children of those mothers were born with a range of problems including missing or malformed limbs, deafness, blindness, disfigurement and other disabilities.
Survivors were provided with compensation from Ottawa in 1991, but have long said it wasn't enough.
The House of Commons unanimously supported a New Democrat motion of support for the victims late last year.
Mercedes Benegbi, executive director of the Thalidomide Victim's Association, said the group is grateful for the federal government's response.
But she said the organization must study the details carefully to assess whether it will meet the long-term needs of survivors.
Benegbi said Health Canada gave the group only 30 minutes notice before Ambrose made the announcement.
"We didn't have any time to review it carefully," she said from Montreal. "It is a great day for the Canadian thalidomide survivors, but it is not necessarily the end of our struggle."
The lump-sum payments are to be available in the next few weeks.
Also on HuffPost