Opposition Leader Tony Abbott said he would oppose a "one-clause bill of rights" and that the Coalition would carefully study any potential legal ramifications of specific anti-discrimination power.
And there is the daunting history of constitutional referenda in Australia: while the landmark 1967 referendum handing the Commonwealth power to make special laws for Aboriginal people and include them in the census gained more than 90 per cent support, only eight out of 44 proposed amendments have succeeded since federation.
Constitutional amendments first require the passage of enabling federal legislation, followed by a referendum that must be supported by a majority of voters in a majority of states.
Gillard would probably succeed in pushing legislation through Parliament with support already pledged by the Greens, and so far the states appear to be accepting the report's recommendations with varying degrees of enthusiasm.
But Australians will need to be convinced. During the height of former Liberal Prime Minister John Howard's popularity in 1999, voters rejected a referendum including a proposed constitutional preamble recognising indigenous Australians.
There is wide acceptance that including Aborigines and Torres Strait Islanders in the nation's founding document - and ridding it of racist clauses - will be a major step in the process of reconciliation.
Decades of policies and massive spending have failed to lift indigenous Australians out of desperate poverty marked by appalling gaps in almost every indicator of health and well-being.
The constitutional proposals are the latest in a process that began with the 1967 referendum and continued with the High Court's 1992 Mabo decision that allowed native title over traditional lands.
In 2008, former Labor Prime Minister Kevin Rudd finally delivered an apology on behalf of the nation.
Gillard believes the time is right for constitutional change, and has promised a referendum on or before the election due next year.
"As a nation we are big enough and it is the right time to say 'yes' to an understanding of our past, to say 'yes' to constitutional change and to say 'yes' to a future more united and more reconciled than we have ever been before," she said.
Abbott said Coalition policy sought a referendum on indigenous recognition in a constitutional preamble and supported the repeal of "obsolete racially discriminatory provisions".
"We accept that millions of Australians' hopes and dreams are resting on constitutional recognition of indigenous people," he said.
But forging a national consensus will not be easy.
Gillard said the Government did not underestimate the challenge of a proposal that would require "the deepest and strongest sword of bipartisanship" to succeed.
Human Rights Commission president Catherine Branson warned of divisions over the shape of constitutional recognition of Aboriginal and Torres Strait Islander peoples and said the Government would need to focus on building a consensus.
The report said a referendum should be held only after a major public education campaign to ensure voters knew what they were being asked to approve, and only if its proposals were supported by both sides of politics and the states.
But opinions were divided, even among indigenous groups. Some saw the report as an historic opportunity to build a "pillar against racism", others that the proposals went too far, some that the changes would be too complex to sell, and others again who believed the report fell short.
The report calls for constitutional recognition that Australia was first occupied by Aborigines and Torres Strait Islanders and of their continuing relationship with traditional lands and waters, respect for their cultures, and for federal powers to make laws for the "peace, order and good government" of indigenous peoples.
