The BBC's Tom Carver: "A number of large German and American companies benefited from this labour"

Until now, cases brought by the half-a-million survivors have failed because the crimes were not committed on American soil.

The bill was introduced to Congress by Democrats Charles Schumer of New York and Robert Torricelli of New Jersey.

It is aimed at victims of forced and slave labour, as well as involuntary medical treatment or experimentation.

A concentration camp victim shows her identification tattoo

It would also cover the "Aryanisation" programme that transferred all Jewish-owned land to Aryan stock, plus refusals to honour Holocaust-era insurance policies.

The bill would extend the statute of limitations, so that compensation claims which expired in 1993 would be valid until 2010, and give the courts - rather than the State Department - power to consider the cases.

If the bill is approved, German companies like Volkswagen and Siemens which used slave labour could be ordered to pay out billions of dollars.

American companies like Ford have also been accused of using slave labour in their factories in Germany before the outbreak of war.

German battle goes on

The battle over compensation is still being waged in Germany, following months of negotiations sponsored by the US.

German companies have offered a total of $2.15bn, topped up by $1.05bn from the German government, in return for an end to all litigation in the German courts.

However, this has been rejected by the families who originally wanted $30bn, but are now demanding a figure closer to £12bn.

US and German mediators are meeting in Washington on Friday, to seek agreement between the two sides.

On Thursday, German Foreign Minister Joschka Fischer said the government would not block a compromise in the talks.

But he added that no more money would be forthcoming from the German government.

Although the government accepts a moral obligation for compensation, he said, it does not accept a legal responsibility: "First of all, it's the obligation of German industry."

The BBC's Washington correspondent Tom Carver says the threat of litigation in the US may well cause the companies to come back with a better offer when the negotiations resume in Berlin on 16 November - if the talks are not postponed.