OTTAWA (CP) - The federal government has set aside $50 million for veterans of Canada's merchant navy, becoming the first allied government to compensate civilian sailors from the Second World War, The Canadian Press has learned.

Documents say an undetermined number of merchant mariners and widows will receive lump-sum payments of up to $24,000 in lieu of benefits they did not receive before 1992. The mariners were declared full-fledged veterans last year.

Veterans Affairs Minister George Baker was briefing representatives from veterans organizations on the package Tuesday, highly placed sources said. A news conference was planned later Tuesday.

The tax-free compensation is graduated according to service aboard cargo ships between 1939 and 1945:

- $20,000 for war-related service of more than two years.

- $10,000 for war-related service of between six months and two years.

- $5,000 for war-related service of between one and six months, or for less than one month if captured, killed or disabled.

- An additional 20 per cent will be paid any prisoner of war.

Canada's merchant mariners supplied Europe during the Second World War. Nearly 1,500 died in the Battle of the Atlantic - a higher casualty rate than any of the armed services.

No one knows how many served. Estimates range between 2,400 and 7,400, including Newfoundlanders who served in the British merchant marine prior to the protectorate joining Confederation in 1949.

Researchers have been scouring archives in attempts to track down the "manning lists" from which convoy crews were assembled. The government has also set up toll-free numbers and a Web site to help spread the word.

To ensure recipients get their fair share of available funds, the payments are being made in two disbursements, the documents say.

"The first will consist of a percentage of their maximum eligible payment," say the papers. "Should there be funds remaining, merchant navy veterans and surviving spouses would be eligible for a second disbursement."

The package, expected to be announced at the news conference, is virtually identical to one Baker negotiated with veterans groups and took to cabinet in December.

Governments and merchant navy groups in Britain, Australia and the United States have been watching the process with interest.

"There is no other nation in the world that's recognized their merchant navy like this," said the source, who spoke on condition of anonymity.

"It'll be setting an international precedent."

The situation is particularly pressing in Britain, whose Newfoundland veterans are now being compensated by Canada for service in the British merchant marine, while British veterans are not.

The Newfoundlanders are also in the unique position of potentially receiving compensation from two governments should Britain follow Canada's lead.

The Canadian merchantmen went into talks seeking flat payments of $20,000 for each veteran and widow, and an additional $20,000 for prisoners of war.

Different sides estimated between $45 million and $60 million was needed to cover program costs.

Represented were the Royal Canadian Legion, Army Navy and Air Force Veterans in Canada, National Council of Veterans Associations in Canada, Canadian Merchant Navy Veterans Association and Merchant Navy Coalition for Equality.

© The Canadian Press, 2000