The historic inquiry will be the country's most extensive investigation into institutional abuse and will have wide-ranging powers to call witnesses and unearth evidence.
The prime minister has come under pressure to act following explosive claims late last week by a senior police officer that the Catholic Church covered up evidence of paedophilia by priests.
Stipulating that she was not seeking to single out an individual church, Ms Gillard said the commission will consider the role of all Australian religious organisations, non-profit groups, child welfare agencies and the response of the police.
"There have been too many revelations of adults who have averted their eyes from this evil," she said.
"The allegations that have come to light recently about child sexual abuse have been heartbreaking. These are insidious, evil acts to which no child should be sub...