“The Government will not make further comment on this matter.”

Folbigg was 35 years old when she was locked up in 2003, wrongly convicted of killing her four young children.

The children – Caleb, Patrick, Sarah and Laura – died between 1989 and 1999 at ages ranging from 19 days to 18 months.

Folbigg was released from prison in June last year after receiving a pardon following an independent inquiry, which heard new scientific evidence that indicated her children may have died from natural causes or a genetic mutation.

Her solicitor Rhanee Rego issued a statement describing the payment as “profoundly unfair and unjust”.

Experts had predicted a payment to Folbigg upwards of A$10m.

“The sum offered is a moral affront – woefully inadequate and ethically indefensible,” Rego said.

“The system has failed Kathleen Folbigg once again. Kathleen lost her four children; she lost 20 of the best years of her life; and she continues to feel the lasting effects of this ongoing trauma.

“The payment does not reflect the extent of the pain and suffering Kathleen has endured. This should be about the system recognising the significance of what it did to her.”

Rego said an inquiry was urgently needed to understand how the Government decided on this figure.

“When Lindy Chamberlain was exonerated in 1994, she received A$1.7m for three years in prison. Kathleen Folbigg spent two decades in prison, yet for her wrongful imprisonment she has been offered A$2m,” she said.

“Kathleen Folbigg’s fight should be over. After being failed at her conviction and abused in prison, she is now being treated with contempt by the very system that should be making amends.”

Greens MP and justice spokeswoman Sue Higginson said the offer was “shocking and insulting”.

“Two million dollars barely covers what Kathleen could have earned on a fulltime salary over 20 years,” she said.

“Kathleen has not only lost 20 years of wages, she has lost her four children, her home and her employability. She has racked up legal costs fighting her wrongful conviction, she has lost her superannuation, and she has been the victim of one of the worst injustices in this state’s history – wrongful imprisonment.”

Higginson said ex gratia payments were payments of grace and goodwill, “but what the Minns Labor Government have done today is offered a disgraceful payment in bad faith, it is ‘go away’ money”.

“It’s unfair and speaks of misogyny and failure to take responsibility for the state’s infliction of a grave injustice,” she said.

In recent times, Folbigg has said she might not be locked in a cell any more but still carried the shackles of 20 years of incarceration.

“I’m always watching who’s coming through the door, who’s behind me. I won’t say fear, it’s not a fear, just a bit of trepidation,” she said during an interview in Newcastle, the place she calls home.

“And I wait for someone else to open doors. When you’re inside, you don’t open doors or you cop it from the guards.

“I hadn’t opened a door for 20 years, so yeah, I even find myself hesitating at my own doors at home.

“Then there is the anxiety that comes with meeting new people.”