Mandelson will tell the chamber of commerce, which encourages two-way trade between Israel and Britain, that the government has accepted the recommendations of Lord Archer of Sandwell, who was appointed to conduct an official inquiry into the compensation claims.

This will mean that all victims of Nazi persecution or their heirs will be eligible to make a claim and that the government will compensate them for confiscated property at current prices.

"This has not been easy," Mandelson said. "There are real practical difficulties in setting up a scheme more than 50 years after the event."

The decision follows a protracted campaign by Nazi victims and their heirs in Europe, who had deposited their assets in British banks for safekeeping before the war.

After the outbreak of war, the assets and property of some 225,000 companies and individuals who were based in German-occupied Europe were designated as enemy property and seized by the Custodian of Enemy Alien Property.

A program was established after the war to compensate Nazi victims whose assets had been seized, and by 1971 some $2.6 million had been paid out.

But the process was hampered by excessive bureaucratic obstacles, causing the government to apologize earlier this year for the insensitivity shown by British officials in processing claims.

Lord Janner of Braunstone, the chairman of the London-based Holocaust Educational Trust, which has spearheaded the campaign for compensation, noted that when the wartime British government seized the assets it made no distinction between the property of the Nazis and the people murdered by them.

Janner, a veteran Labor parliamentarian, hailed the decision as "a remarkable gesture of honor and faith," and said the government had done "the decent thing."