The Papua New Guinea Government has granted Bougainville 3.7 million US dollars to pay for the election of an autonomous government.
It was one of several resolutions reached at this week's meeting of the Interim Joint Consultative Body which is made up of officials from the national government and Bougainville.
The Inter-Government Minister, Sir Peter Barter, says the meeting also agreed on a site for the seat of government - for the first 12 months at least.
It's expected that Arawa, the old provincial capital which was wrecked during the civil war, will be the capital eventually, but Sir Peter says logistically it could be difficult in the early stages.
"I was prepared to go along with the logistical problems and just have it down there (at Arawa) as a ceremonial opening of the government, and then if necessary, go back to Buka until such time that the housing and other infrastructure was available to fully support the autonomous government. But we made the decision that is better to have it in Buka."
Sir Peter says Bougainville has also asked if it can gain access now to the funding earmarked for the setting up of the new government.