The British government accepts that colonial forces in Kenya tortured and abused detainees during the Mau Mau rebellion, the High Court has heard.
Three elderly Kenyans who are suing the government for damages were told it did not dispute that "terrible things" had happened to them.
Their lawyers say it is the first ever official acknowledgement by the UK.
The revolt against British rule in Kenya in the 1950s and 1960s was marked by atrocities, with thousands killed.
The British government argues that too much time has passed for a fair trial to be conducted.
Before starting cross-examination of witnesses at the trial, the QC for the British government, Guy Mansfield, said he did not want to dispute that civilians had suffered "torture and ill-treatment at the hands of the colonial administration".
He spoke directly to each of the witnesses, saying he did "not want to dispute the fact that terrible things happened to you".
Papers in the test case were first served on the UK in 2009.
In 2011, a High Court judge ruled the claimants - Paulo Muoka Nzili, Wambuga Wa Nyingi and Jane Muthoni Mara - did have an arguable case.
The claimants' lawyers allege that Mr Nzili was castrated, Mr Nyingi severely beaten and Mrs Mara subjected to appalling sexual abuse in detention camps during the rebellion.
A fourth claimant, Ndiku Mutwiwa Mutua, has died since the High Court ruling that the test case could go ahead.
With the help of interpreters at the High Court, the three - now in their 70s and 80s - were briefly questioned about written evidence they had provided.
In his statement Mr Nyingi, 84, a father of 16 who still works as a casual labourer, said he was arrested on Christmas Eve 1952 and held for some nine years.
During his detention, in 1959, he says he was beaten unconscious during an incident at Hola camp in which 11 other prisoners were clubbed to death. He says he has scars from leg manacles, whipping and caning.
His statement says: "When I was released I would have nightmares about three times a week. I would dream about the murder of people at Hola.
"These nightmares continued for about four years."
Mr Nyingi also says that reminders of these "terrible events" made him so sad and stressed that he would develop headaches which left him unable to work.
He says he feels "robbed of my youth", adding: "I have brought this case because I want the world to know about the years I have lost and what was taken from a generation of Kenyans."
Mr Nyingi said he only realised he could seek compensation after an interview with the Kenya Human Rights Commission in 2006.
"If I could speak to the Queen I would say that Britain did many good things in Kenya, but that they also did many bad things.
"The settlers took our land, they killed our people and they burnt down our houses.
"In the years before independence people were beaten, their land was stolen, women were raped, men were castrated and their children were killed.
"I do not hold her personally responsible but I would like the wrongs which were done to me and other Kenyans to be recognised by the British government so that I can die in peace."
The three Kenyans want an official apology and damages to set up a Mau Mau welfare fund.
Their lawyers have said they represent hundreds of Kenyans who were victims of the brutality during the revolt.
In his ruling in 2011, Mr Justice McCombe emphasised he had not found there was systematic torture in the Kenyan camps nor that, if there was, the British government was liable for what had passed.
It will now be decided whether a fair trial is still possible.
The hearing will have access to an archive of 8,000 secret files that were sent back to Britain after Kenya gained its independence in 1963.
Earlier in July, South African Archbishop Desmond Tutu wrote to Prime Minister David Cameron accusing Britain of neglecting its human rights duties over the case.
The hearing continues.