WASHINGTON - The Obama administration yesterday proposed spending more than $3 billion to settle a long-running lawsuit with American Indian tribes that contend that they were swindled out of billions of dollars in royalties for oil, gas, grazing, and other leases dating back more than a century.

Under the agreement, the Interior Department would distribute $1.4 billion to more than 300,000 Indian tribe members to compensate them for historical accounting claims and to resolve future claims. The government also would spend $2 billion to buy back and consolidate tribal land broken up in previous generations.

The program would allow individual members to obtain cash payments for land interests divided among numerous family members and return the land to tribal control. The settlement also would create a scholarship account of up to $60 million for tribal members to attend college or vocational school.

If cleared by Congress and a federal judge, the settlement would be the largest Indian claim ever approved against the U.S. government, exceeding the combined total of all previous settlements of Indian claims.

Last year, a federal judge ruled that the Indian plaintiffs are entitled to $455 million, a fraction of the $47 billion or more the tribes have said they are owed for leases overseen by the Interior Department since 1887.

President Obama said settlement of the case, Cobell v. Salazar, was an important step to reconcile decades of acrimony between Indian tribes and the government.

"As a candidate, I heard from many in Indian country that the Cobell suit remained a stain on the nation-to-nation relationship I value so much," Obama said in a written statement. "I pledged my commitment to resolving this issue, and I am proud that my administration has taken this step today."

Interior Secretary Ken Salazar called the case a top priority for him and Obama, and said the administration worked for many months to reach a settlement that is both honorable and responsible. "This historic step will allow Interior to move forward and address the educational, law enforcement, and economic-development challenges we face in Indian country," he said.

Elouise Cobell of Montana's Blackfeet Tribe, who was the lead plaintiff in the case, called the proposed settlement crucial for thousands of Native Americans who have suffered for more than a century through mismanagement of the Indian trust.

"Today is a monumental day for all of the people in Indian Country that have waited so long for justice," said Cobell. "Did we get all the money that was due us? Probably not," she said but added: "There's too many individual Indian beneficiaries that are dying every single day without their money."

The settlement would give every Indian tribe member with an Interior Department account an immediate check for $1,000, with additional payments to be determined later under a complicated formula that takes into account a variety of factors. Many tribe members also would receive payments for parcels of land that are held in some cases by up to 100 family members, in an effort to consolidate tribal land.

The proposed settlement affects tribes across the country, including virtually every recognized tribe west of the Mississippi River. It doesn't include an apology for any wrongdoing by the government, but acknowledges a "breach of trust" on Indian land issues.

An apology "would have been nice," Cobell said, but "actions are more important to me than apologies."