The government will issue special-purpose bonds to help fund the scheme, which will allow Tokyo Electric to handle compensation payouts that are expected to run into the tens of billions of dollars. There will be no ceiling set on Tokyo Electric's liabilities.

Other utilities will also be asked to pay annual premiums into the fund.

The scheme had been expected to be approved by Prime Minister Naoto Kan's cabinet on Thursday but was delayed for one day due to disagreement among ruling party members over details of the plan.

The plan is designed in principle to protect bondholders and will keep Tokyo Electric (Tepco) shares listed, although the utility is expected to forgo dividend payments for several years as it pays back the fund for compensation.

The government plans to inject about 5 trillion yen (US$62 billion) worth of special-purpose bonds into the compensation fund, lawmakers told reporters earlier this week.

In one government simulation, if compensation totals 5 trillion yen, Tokyo Electric would be asked to pay back 200 billion yen to the fund annually over 13 years, with the rest to be shouldered by the other utilities.