The Indian government on Friday approved a proposal for a German environmental agency to dispose of over 350 tonnes of waste produced by the Bhopal factory where a gas leak killed thousands in 1984.

Home Minister P. Chidamabaram and other senior ministers met in New Delhi to clear a deal in which the waste will be taken by air to Germany for incineration.

"The ministers have given a green signal," a senior home ministry official told AFP, declining to be named.

"The German Society for International Cooperation (GIZ) has been awarded the contract to transport the waste to Germany for disposal," he said.

The GIZ, based in Bonn, is a government-run enterprise that works on international environmental issues and sustainable development.

Bhopal was the scene of the world's worst industrial accident in 1984 when the pesticide factory leaked toxic gas into nearby slums, killing thousands instantly and tens of thousands more over the following years.

Tonnes of chemical waste previously produced by the plant was left in pits around the site, polluting local water supplies.

Residents have been campaigning for years for the thorough clean-up of the factory and the surrounding area.

GIZ, which will be paid by the Indian government, will negotiate details of the deal with the Madhya Pradesh state government, of which Bhopal is the capital.

Many experts believe that the presence of toxic waste has resulted in a high prevalence of birth defects and illnesses among successive generations of people living near the plant.

The accident was blamed on the factory's operators, Union Carbide, a US chemical group later bought by Dow Chemical.