The deal to compensate people forced to work as slave labourers by German companies during the Nazi era has been finalised in Berlin.

The agreement closes a painful chapter in Germany history, though not all surviving victims are happy with the agreement.

It was signed by the German Chancellor Gerhard Schroeder and the American Secretary of State Madeleine Albright.

Under the deal, a fund run equally by German firms and the government will pay DM10bn ($5.1bn) to compensate the country's former slave workers.

Confirming the deal, the chief German negotiator in the talks, Otto Lambsdorff, said: "Germany must and will accept responsibility for the darkest chapter in its history."

"It was the government of the Reich that hunted cheap labour on the streets of Poland and the Ukraine. We are talking here about state-sponsored crimes," he added.

Mrs Albright called the deal the first serious attempt to compensate "those whose labour was stolen or coerced during a time of outrage and shame."

"It is critical to completing the unfinished business of the old century before entering the new."

The deal, Mrs Albright said, "will take US-German relations to new heights in the new millennium."

The BBC's Caroline Wyatt in Berlin says a deal had proved elusive, until German companies, eager to do business abroad, faced legal action from survivors in the United States.

Last-minute wrangling

Just before the signing of the agreement, there appeared to be some last minute wrangling over the compensation. Mr Lambsdorff indicated that the offer was final.

"Ten billion marks is a final amount. It will cover all questions covered by the initiative. Let there be no doubt: this applies to administration costs including expenses for publicising the claim applications and for lawyers fees."

Other problems remain. Not all the surviving victims are happy with the agreement. The fund could pay out as little as $3,000 each to most of the survivors.

Lawyers for former slave labourers said more than a month might be needed to resolve key questions, including whether people already receiving war reparation payments from Germany would be eligible for additional money as former slave labourers.

One lawyer, Edward Fagan, described these outstanding issues as "not just significant, but critical."

It is also feared that many elderly former slave labourers may not live to see the payment of compensation as the fund is not expected to be ready until next year.

Some 12 million people were forced by the Nazis to work unpaid in inhuman conditions.