People who had valuable treasures stolen by the Nazis are being offered new hope of winning them back or gaining compensation.

A panel is being set up to resolve disputes over looted artwork and other valuables which are now held in British museums.

The panel will be able to hear claims from people, or their heirs, who believe they had treasures stolen.

It will have the power to recommend that items such as paintings or furniture can be returned to the original owners if they were found to have been stolen during the Nazi era.

It will also be able to recommend paying compensation to claimants.

And panel members could advise museums to display alongside the artwork an account of its history.

In addition, they will be able to advise the government on further action needed to return stolen treasures.

No budget

Arts Minister Alan Howarth said the aim was to avoid claimants, many of whom may be very old, being forced to take expensive and lengthy legal proceedings.

He said: "Dreadful things happened in the Nazi era.

"We can, even at this distance of time, do something to enable some justice to be done.

"I believe this represents a responsible and fair approach to the resolution of claims."

Mr Howarth said no budget had been set aside to pay compensation and the panel's findings would have no legal force.

But he said claimants will still have the option of court action if they are unhappy with a decision.

A nationwide audit is being carried out to establish how many Nazi-looted artworks are in British museums and collections. It is believed there is only a handful.

Hampton Court painting

One picture expected to be claimed is View of Hampton Court Palace, by Jan Griffier the Elder, which now hangs in the Tate Gallery.

It is thought by some to have hung in a private house in Germany before the family were forced to flee from the Nazis.

The panel - which will be known as the Spoliation Advisory Panel - is likely to be comprised of historians, philosophers and lawyers.

Two weeks ago, the North Carolina Museum of Art in the US concluded that a 16th Century painting by Lucas Cranach the Elder, of Madonna and Child in Landscape, was stolen by Nazis from a Jewish collector.

Museum chiefs hope the owner's heirs will allow the painting to stay there.