Guatemala says it will pay at least $420m to paramilitaries who battled rebels during the country's civil war.
Former paramilitaries say they were forced into service by the army
The former fighters, who activists say are responsible for war crimes, had threatened to paralyse the country if Congress did not approve the payments.
The paramilitaries have been demanding compensation since they were disbanded in 1996 at the end of the central American state's civil war.
The government says it will pay about $600 to each of about 700,000 fighters.
Paramilitary groups say 1.3 million people are entitled to compensation.
In approving the payments Congress overturned a ruling by the country's highest court last year which had declared the payment of the fighters unconstitutional.
The former militia members have been putting pressure on the government to pay them for months, threatening to blockade roads and shut airports.
"We are satisfied that we have overcome this crisis," said Felipe Yaxon, leader of one of the paramilitary groups, according to Reuters news agency.
Human rights activists say the former paramilitaries were behind some of the country's worst war crimes, including massacres, rapes and tortures.
More than 200,000 people disappeared or were killed during the 36-year civil war.
Members of the Civilian Self-Defence Patrols, which were set up in 1982 during the civil war, were unpaid and supposedly volunteers but many say they were forced to serve.
"We had no choice, either we patrolled for up to 24 hours at a time or the army killed us," one former paramilitary fighter, Erasmo Ramirez, told Reuters.