Manitoba Liberals are promising to return $338 million in federal child benefits diverted away from Indigenous children in this province.

Liberal Leader Dougald Lamont promised Tuesday to ensure funds clawed back from provincial child-care agencies find their way to their intended recipients, many of whom are now adults and some of whom do not have homes.

"More than half of Winnipeg's homeless population right now were in CFS care at some point. That's the kind of parent Manitoba was to Indigenous children," Lamont said at a campaign announcement at Central Park in Winnipeg.

Through the children's special allowance, the federal government used to provide a monthly payment of $455 to $530 for each child in care to Manitoba Child and Family Services.

Beginning in 2006, Manitoba's NDP government, led by former premier Gary Doer, required the agencies to remit the money. The stated rationale at the time was the province was paying for the maintenance of children in care and thus the money was owed to them.

That cash was put into general revenue. If agencies refused to remit it, the government withheld 20 per cent of the agency's operating funds.

"As more children were taken from their families and communities, the more money was taken," Lamont said.

The diversion of these funds ended in 2019.

Former premier Brian Pallister's PC government passed legislation in 2020 to prevent lawsuits over returning the diverted funds.

Lamont called that unconscionable as well, and chided successive NDP and PC governments for diverting money away from vulnerable Indigenous people.

He said the intended recipients of the money are known through child-care agency records, even though some of these recipients may not be aware of it.

Some are owed as much as $90,000, Lamont said.