Hundreds of sufferers of a deadly asbestos-related cancer who up until now have not been entitled to compensation will now qualify for damages of around £10,000.
The change was proposed under draft laws which have now been approved by the House of Lords.
Previously, only people who contracted mesothelioma from exposure to asbestos at work were able to claim a lump-sum payment from the Government.
The new Mesothelioma Lump Sum Payments (Conditions and Amounts) Regulations 2008 extend this right to anyone who contracted the disease through indirect exposure, such as those exposed to asbestos fibres through washing a relative's overalls or who lived near a factory using asbestos.
Under the new rules about 600 people a year who did not qualify under the old system will receive an average of £10,000 each. The scheme is expected to cost the Government £6 million a year for the first two years, but this will be recouped from the companies responsible.
Claimants are only entitled to the compensation if they were exposed to asbestos in the UK and have not already received a payment from elsewhere in respect of their illness.
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Adrian Budgen from law firm Irwin Mitchell said: "While no amount of money will ever compensate individuals and families for the suffering and loss caused by mesothelioma, a devastating illness, those who are suffering deserve some form of monetary compensation and while it is likely to be of some benefit to them. The Act is expected to come into effect in October or November."