Cambodia's government has moved to resolve a land dispute with about 1,000 families in Phnom Penh after the World Bank threatened to cut off future loans to the country.

Under the deal, which became public Tuesday, the government has set aside a 12-hectare plot on a 133-hectare development site for the resettlement of families displaced by the project.

That meets a key demand of the families, which have held repeated protests over the scheme to fill in a site at Boeung Kak lake to make room for luxury shops and apartments. The project is a joint venture between a well-connected Cambodian politician and a Chinese company.

The World Bank last week admitted it had failed to protect the residents when it participated in a land registration project a few years ago. A spokesman Tuesday welcomed the government's decision but did not say whether a freeze on loans will be lifted.

More than 2,000 families have already moved away from the development site, accepting what many considered inadequate compensation for their homes.

The bank said the loan freeze would not affect its current projects in Cambodia. According to its website, it has more than 20 active projects involving more than $400 million in funding.