By Tom Gibb
BBC Brazil correspondent
Police and drug cartels are involved in almost daily clashes
Brazilian Justice Minister Marcio Thomas Bastos has announced an agreement to release almost $15m aid to Rio de Janeiro, after a wave of drug-related violence.
The money, he said, would be used to create a new elite police unit as well as to strengthen existing police forces.
Rio now has a murder rate worse than some war zones.
Almost daily shoot-outs between the police and drug cartels are raising fears that Rio de Janeiro is facing something akin to a guerrilla war.
Calls for troops
The violence has been growing all year after the state authorities adopted a policy of confronting the gangs in their shantytown strongholds instead of making deals with them.
Now the gangs have been burning buses, setting off home-made bombs and attacking police patrols - a show of strength to make the authorities back off.
This week there were calls for troops to be put on the streets after a university student was seriously injured on campus by a stray bullet.
To make matters worse, Rio is almost bankrupt, which is why the federal government is now stepping in with money.
While rejecting the use of troops, the justice minister announced the creation of a new elite police unit for the city.
He signed an agreement with Rio's newly appointed security chief, Antony Garotinho, who has announced his own package of measures.
His appointment is controversial because he is tainted by a major corruption scandal involving officials in office while he was state governor.