The government has agreed to pay an industrial waste disposal company near the U.S. Atsugi Naval Air Facility in Kanagawa Prefecture some 5.2 billion yen in compensation for halting the operations of its incinerators, which have been linked to high levels of dioxin, officials said Friday.

Envirotech Co. will cease operations by the end of April, according to the agreement.

Washington has complained for years that the health of U.S. service members and their families has been threatened by high levels of dioxin released from the incinerators.

Earlier in the day, the Cabinet approved the spending of 6.06 billion yen to settle the diplomatic issue, an ongoing affair for almost a decade.

The cost of removing the incineration facilities will be met from this amount.

A joint study by the government and U.S. military in 1999 detected dioxin levels considerably higher than normal at the base, which is about 350 meters away from the incinerators.

Washington had repeatedly demanded that Tokyo address the matter.

Toshitsugu Saito, director general of the Defense Agency, voiced relief at a news conference Friday, saying that a brisk settlement of the issue was indispensable in enhancing the credibility of the bilateral security system.

With the company having installed filters on the incinerators, Tokyo also promised Washington in March 2000 that higher chimneys would be built to prevent smoke from directly affecting the high-rise U.S. housing complexes. The company, however, declined to erect the chimneys.

The U.S. accordingly filed suits with the Yokohama District Court the same month, demanding that the incinerators' operations be halted.