The government is expected to pitch in an initial 2 trillion yen ($26 billion) in the form of special government bonds, Kyodo News has reported, but the eventual cost is expected to be far higher.

Under the bill, which passed through the upper house, embattled operator Tokyo Electric Power Company (TEPCO) and other atomic power companies will also pay into the fund, which will then compensate the victims.

The world's worst nuclear disaster since Chernobyl 25 years ago has forced the evacuation of more than 80,000 people from a 20-kilometre (12-mile) zone around the tsunami-hit plant and more from radiation hotspots beyond.

The nuclear crisis, sparked by the powerful March 11 quake and tsunami, has also heavily impacted the farm, fisheries and tourism sectors.

The law did not spell out how much money the new body would receive and, although it called for "cooperation from shareholders and other interested parties", it did not say what this would mean in detail.

AFP