The French government has promised to give New Caledonia's southern province 10 million US dollars towards improving living conditions in Noumea's shanty towns.
The overseas territories minister, Marie-Luce Penchard, has visited the area on the fringe of Noumea where 8,000 people have settled after moving in from the country-side, outer islands or Wallis and Futuna in search of work.
The president of the southern province's government, Pierre Frogier, says life has to be made more dignified for people in the area which is to be hooked up to water and electricity as well as to the rubbish collection network.
100 million US dollars is reportedly needed to rehabilitate all the 14 squatter settlements in the Noumea area.
Some residents have said they prefer to stay where they can have their gardens rather than being moved into apartment buildings.