American negotiators have initialled a twenty year funding package for the Marshall islands worth more than 800 million US dollars in direct funding.
The deal will also supply federal services worth millions more.
The funding arrangement, made under the Compact of Free Association between the Marshalls and the US, now has to go before Congress for approval.
The whole Compact is also under review.
The Marshall Islands are concerned the grants and trust fund assistance will not be adequate by 2023 to replace current funding.
It has called for the grants to be 100 per cent inflation adjusted, while the US is only offering 67 per cent.