The federal government on Friday reached a $25.5 million settlement with the families of Hungarian Holocaust (search) victims and will acknowledge the U.S. Army's role in commandeering a trainload of the families' treasures during World War II (search).

Under the terms of the settlement, the money will be distributed to needy Hungarian Holocaust survivors rather than individual claimants who lost family possessions.

About $21 million in funding for humanitarian services will be distributed to social service agencies worldwide based on the percentage of survivors, including 40 percent in Israel, 22 percent in Hungary, 21 percent in the United States and 7 percent in Canada.

Up to $3.85 million is proposed for legal fees and costs. A total of $500,000 would fund an archive on the so-called Nazi "Gold Train" (search) for scholarly and educational uses.

A commission appointed by then-President Clinton concluded in 1999 that high-ranking U.S. Army officers and troops plundered the train after it was intercepted on its way to Germany in May 1945.

The train carried gold, jewels, 1,200 paintings, silver, china, porcelain, 3,000 Oriental carpets and other heirlooms seized from Jewish families by the Nazis. The cargo was worth an estimated $50 million to $120 million.

The lawsuit sought up to $10,000 each for as many as 30,000 Hungarian Jews and their survivors.

Terms of the deal were leaked to an Israeli newspaper in December, but United States acknowledgment of its soldiers' role in looting the train was not resolved until recently.

"The case never really was about money. It was about having a reckoning with history," said Sam Dubbin, one of the families' lawyers. He called the agreement "a great outcome."

The Justice Department, which negotiated on behalf of the government, issued a statement saying it was "very pleased to announce" the settlement but said it would be inappropriate to add comment on a pending legal matter.

Some of those who lost their family possessions on the train, however, had mixed views on the settlement because it does not satisfy individual claims.

"I can't say that I'm happy with the settlement, but I am happy that we have a closure," said David Mermelstein of Miami, one of the plaintiffs. "I expect (the United States) to acknowledge that it was a mistake not to return the property to the rightful owners."

The agreement concluded it "would be impractical" to divide money among an estimated 60,000 Hungarian survivors because of the difficulty determining who had what on the train and the costs of determining eligibility for compensation.

"This case has little precedent," the two sides wrote the judge. "Many of the participants are dead. There are evidentiary gaps. The actions of the United States that the plaintiffs challenge followed in the wake of the worst crime in modern history."

Events were complicated by migrating populations, border shifts and foreign policy realignments as the Soviet Union solidified its hold on Eastern Europe.

A hearing on preliminary approval of the settlement is set for Thursday. Final approval is expected by October.