Lithuania's government on Wednesday approved a foundation to allocate 128 million litas ($49.45 million) in compensation for Jewish communal property appropriated during Nazi and Soviet times.
The step follows last year's decision by the parliament to pass a special law after years of negotiations and calls from Lithuania's Western allies, including the United States, to reach the settlement.
"It's a historical step. As far as I remember, it took 18 years to arrive to this date," Simonas Alperavicius, chairman of the Lithuanian Jewish Community (LJC), told Reuters.
The government press statement quoted him as telling the cabinet members that their decision was "a miracle".
The funds, which could be used to support Jewish life and heritage in the Baltic state, would be jointly administered by the LJC and the World Jewish Restitution Organization.
The payments are to be spread over a ten-year period. The first payment of $1.15 million will be used to assist the needy Lithuanian Holocaust survivors.
Alperavicius said there were about 4,000 Jews left in Lithuania, which saw 90% of its Jewish community wiped out in the Holocaust.