Documentary credits may be used to dislodge an apparent impasse in an arrangement under which Germany's biggest companies would recompense people employed as slave labour during the Nazi era.

The companies, which include Deutsche Bank and industrial giants such as Volkswagen and DaimlerChrysler AG, have pledged a further US$650 million to a fund established by the German government and industry to settle around 60 lawsuits in which German and Austrian companies stand accused of profiting from forced labour or banking and insurance methods employed during the Nazi period.

The fund's 6,000 members have now apparently raised enough money to complete the US$4.8 billion required in the fund before it can start to make compensation payments to victims.

But they have also said they will not commence payments to the estimated one million survivors until US courts drop all holocaust-related lawsuits against German firms.

Lead counsel for the US plaintiffs, Burt Neuborne, welcomed the news that the fund had been topped up but insisted more was needed to secure compensation for his clients. "The fact that they've raised the money isn't enough, they have to come up with some sort of legally binding guarantee," he said.

The New York lawyer has suggested two ways to do this. Funds could either be paid into an escrow account or a German bank could underwrite a documentary credit guaranteeing that the funds would be available for the survivors.

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