The Canadian Government is planning to step in and pay compensation to former prisoners of war used as slave labour by Japan during World War II.

Japan has refused to pay compensation to former allied PoWs despite repeated appeals to the country and the United Nations.

Nearly 2,000 Canadians were taken prisoner by Japan during World War II, although fewer than 700 are still alive.

Like many other allied prisoners they were used as slave labour in Japan's war effort - in mines, dockyards and other industries.

Earlier this year Japan's High Court rejected the latest attempt to gain compensation - a compensation suit filed by a coalition of former allied prisoners.

The Japanese Government refuses to re-open the issue, maintaining that compensation was dealt with in a 1951 peace treaty.

After years of unsuccessfully lobbying Japan, Canada says it is time for the country to stop wasting its efforts on prolonged legal fights and pay the compensation itself.

Canadian Foreign Affairs Minister Lloyd Axworthy says the file is now closed, and his country's government will not make any further attempts to get compensation from Japan.

The Canadian package will give each former prisoner, or a surviving spouse, about US$16,000. It will also apply to 26 airforce veterans, who were prisoners in the Buchenwald concentration camp in Germany.