The United States and world Jewish organizations have long called on the Lithuanian government to reach a settlement, though some property has already been returned.
"With this bill we demonstrate good will and an understanding of the tragedy the Jewish community suffered during the Holocaust," Lithuania Prime Minister Andrius Kubilius told public radio.
More than 90% of Lithuania's 220,000-strong Jewish community were wiped out during the Holocaust.
Under the bill, which still has to be signed into the law by the president, the government would pay 125 million litas ($51.93 million) between 2013 and 2023 to a special fund.
A further 3 million litas would be paid directly to Holocaust survivors in 2012.
The bill, which says it aims "to restore historical justice", was backed by 82 lawmakers in the 141-seat parliament with 18 abstentions.
Lithuania's Jewish Community group, the biggest Jewish organization in the Baltic state, welcomed the move, though it had reservations.
"We have backed the bill... because this is what the state can afford at this stage," Faina Kukliansky, deputy chairwoman of Lithuanian Jewish Community, which has about 3,000 members, told Reuters.
She said the community has been negotiating for compensation with the government since 2002.
"What is important is not even the sum of money, but that the principal of matter has been solved," Kukliansky said.
- Follow Ynetnews on Facebook