The Canadian government on Friday appealed a federal court decision upholding a ruling that it individually compensate indigenous children and their caregivers harmed by a discriminatory welfare system, but said it would pause the appeal while engaging in talks with the initial complainants.

The decision is the latest twist in a 14-year legal battle, but also a sign that Prime Minister Justin Trudeau's government, which has long pledged its commitment to indigenous people, feels its chances of success are better outside the courtroom.

It comes against a backdrop of key legal victories for indigenous peoples...