The father of a child murdered in the Omagh bomb attack has called for payments to relatives of terrorists killed in the Troubles to be withheld until paramilitary groups have made a full disclosure of their actions.

Victor Barker’s son James was 12 when he one of the 29 people killed by the Real IRA car bomb in August 1998. The Surrey solicitor is angry at proposals to be made by the Consultative Group on the Past that the families of all who died in the Troubles should receive £12,000 each even if their relatives were terrorists.

The controversial idea is part of a 200-page report which has been presented to Gordon Brown, the prime minister, by Lord Eames, the former head of the Church of Ireland, and Denis Bradley, a writer and commentator. Their report will be published on Wednesday. The total cost of measures proposed in the report would come to £300m, £40m of which would be payments to families of all who died in Ireland, Britain and Europe.

The proposal is based on a €15,000 (£14,100) payment made by the Irish government to each family resident in the republic who were bereaved by the Troubles. This payment was made not only for innocent victims, but also for IRA members killed in Britain and Northern Ireland.

The Eames/Bradley scheme is more controversial because it will cover far more terrorists. According to figures maintained in the University of Ulster’s Conflict Archive, 3,525 people died between 1969 and 2001 as a result of the conflict. Of these 547 were members of illegal organisations (394 republicans and 153 loyalists), 1,854 were uninvolved civilians and 1,114 were members of the security forces (10 of them Irish and the remainder British).

Barker points out identifying terrorists, to exclude their families from the scheme, would be relatively easy, since paramilitary groups such as the IRA usually claimed dead members, erecting memorials and publishing “rolls of honour”.

Many other victims have reacted with anger to the proposal. Raymond McCord, whose son, also called Raymond, was killed by the UVF, said it was as if the American government had set up “a fund for the victims of the 9/11 atrocities and made sure that the families of the suicide-hijackers who also died on the crashed jets get compensation as well”. He believes some relatives will refuse the payment if it also goes to families of dead terrorists.

Paula McCartney, whose brother Robert was stabbed and beaten to death by a republican mob four years ago, said the idea was absurd. “Throwing money at the situation won’t resolve anything. What is needed is action to restore faith in the criminal justice system,” she said.

The angry reaction has overshadowed other aspects of the Eames/Bradley report, which took 19 months to prepare. The central proposal is for a legacy commission. Its three members would be appointed by the British and Irish governments in consultation with the Office of First and Deputy First Minister in Stormont.

This body would sit until 2015 with a budget of £160m. It would have the task of developing material on themes such as sectarianism and reconciliation as well as reviewing all the Troubles killings. It would subsume both the work of the PSNI’s Historic Enquiries Team (HET) and the police ombudsman’s role in investigating accusation of wrongdoing against the RUC. It would also put an end to more public enquiries into the Troubles, although those currently under way would be allowed to run their course.

Where prosecutions were impossible, victims’ relatives would be given the option of granting immunity to the killers in return for information.

Another proposal is for a £100m bursary to which groups dealing with trauma and reconciliation could apply for funds.

The bulk of the funds would come from the British government, though the Irish government would also be expected to make a substantial contribution.

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