In a statement, Mr Hague said: 'The government is determined that there should be no cover-up of events in the past and that every possible step is taken to protect children in care in future.'
The setting up of the inquiry has to be approved by the Commons and the Lords. The inquiry will be conducted under powers provided by the Tribunals of Inquiry (Evidence) Act 1921. The chairman will be Sir Ronald Waterhouse.
It will consider:
-- whether the agencies and authorities responsible for such care could have prevented the abuse or detected its occurrences at an earlier stage;
-- the response of the relevant authorities and agencies to allegations and complaints of abuse made to them during this period, excluding scrutiny of decisions whether to prosecute named individuals; and
-- whether the caring and investigative agencies discharged their functions appropriately and whether the caring agencies are doing so now.
Mr Hague criticised severely the former Clwyd CC over its handling of its own inquiry (the Jillings inquiry into child abuse).
He told the Commons the successor authorities to Clwyd had informed him that the report could not be published because it was likely to contain evidence given in confidence and was so 'seriously and extensively defamatory' that an acceptable version could not be produced.
'This reflects badly on the former council,' he said.
'It devoted two years and a substantial amount of public money to an inquiry, the report of which cannot safely be published.'
Mr Hague also announced the publication of the Adrienne Jones report which he commissioned into the child care practices and procedures of the former Gwynedd and Clwyd county councils and of the private homes in their areas.
The report found that although a framework of policies and procedures was in place there were some significant gaps.
Mr Hague said: 'The report contains 41 recommendations most aimed at improving the planning, management and monitoring of children's services.
'I accept the thrust of Adrienne Jones' conclusions and mean to ensure that her recommendation for more resources to be devoted to the social services inspectorate for Wales is acted upon as soon as possible.
'But the report also reveals that serious shortcomings remained until the abolition of Clwyd and Gwynedd county councils.'
That 'disturbing' conclusion, together with the 'mis-handling' of the Jillings report and continuing public concern, are, Mr Hague says, the reasons he has proposed a judicial inquiry.
'The child abuse that was allowed to occur in north Wales, and the failure of the authorities concerned to deal with it, represents a very sad chapter in the history of public child care,' he said.
'The Adrienne Jones reporthelps to point the way for the future, but its conclusions will reinforce the public's concerns about the management of children in care in north Wales.
The proposals the government is announcing today - a judicial inquiry into the events in north Wales, the review by Sir William Utting, and the increased supervision of sex offenders after release from prison - demonstrate the determination of the government and this House to tackle the evil of child abuse and to secure the safety of all children in care.'