A spokesman for the Bougainville Governor, John Momis, says youths occupying a High School on the Papua New Guinea island of Bougainville have agreed to leave.
The Hutjena Home Guard has been occupying Hutjena High School in a bid to be paid hundreds of thousands of US dollars for guarding school property during fighting seven years ago.
The provincial government has said it cannot afford to pay the group but has been in talks with its representatives over the past two days in an attempt to resolve the row.
Elly Sawa, spokesman for Governor Momis, says both parties have now agreed in principle to draft a Memorandum of Understanding on how the matter will be resolved.
Mr Sawa says there is no commitment to pay anything yet.
"It has not come up with a specific, I mean, an agreement on a certain request. But overall the administration has just agreed at whatever it could do to address their demands. So they have to come up with an MOU."
Mr Sawa says the Hutjena youths told chiefs they will free the school by Monday.
Earlier, parents of Hutjena students are reported to be demanding that Buka pupils vacate their places in mainland Bougainville schools so Hutjena pupils, who have been barred from school, can continue their education during the stand-off.