LONDON (AP) _ The government will establish a $40 million fund to compensate victims of Nazi persecution whose assets were seized by Britain during World War II, Trade and Industry Secretary Peter Mandelson said Tuesday.

Britain's 1939 Trading with the Enemy Act sought to stop ``belligerent countries'' using property belonging to their nationals to finance Hitler's war effort. However, innocent victims, including many Jews who had sent cash and valuables to Britain for safekeeping, also had their assets seized under the act.

Mandelson said victims of Nazi persecution who had assets confiscated under the legislation could make claims, which will be considered by a panel of three independent assessors. Claims will be paid at today's values to the original owners or their heirs, he said.

``This government is aware that time is of the essence to victims of Nazi persecution and their families,'' Mandelson said. ``We shall therefore establish the claims scheme as a matter of urgency so that claims for compensation may be met as soon as possible.''

Neville Nagler, director general of the Board of Deputies of British Jews, called the fund ``a very important step forward.''

``Former governments did not deal fairly with many who came to Britain as victims and refugees, only to have their assets confiscated,'' Nagler said. ``It is never too late to recognize past wrongs.''

The government appointed Lord Archer of Sandwell in June to study the compensation issue, and he recommended the fund be established, Mandelson said.

Mandelson said he had already received a number of potential claims.

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EDITOR'S NOTE _ A list of more than 25,000 records of those whose property was confiscated is on the Internet at www.enemyproperty.gov.uk