Around 60 veterans suffering from asbestos-related cancer will receive £140,000 lump sum compensation payouts after ministers bowed to pressure from the Royal British Legion to extend an earlier scheme, it is understood.
The former military personnel who contracted mesothelioma during their service will be entitled to the payments in an extension of a scheme announced in December.
The veterans were originally denied the compensation because they were diagnosed with the cancer before the scheme started.
Commodore Rhod Palmer, a third-generation Royal Navy sailor who was diagnosed with mesothelioma in April 2015 and stood to miss out on the payments, described the move as a "real breakthrough".
The 62-year-old also called for more research into the treatment of the "devastating" illness and thanked the Royal British Legion for its support.
He said: "No amount of money will ever compensate sufferers and their families for a preventable death.
"However, it is a real breakthrough that the government will treat all current and future sufferers of mesothelioma exposed to asbestos during their service under comparable terms as civilians."
Chris Simpkins, director-general of the Royal British Legion, said the Government had "done the right thing".