A class action lawsuit over chemical contamination in the Queensland town of Oakey is a step closer after Australia's largest litigation funder, IMF Bentham, agreed to provide financial backing.
The lawsuit, being led by Shine Lawyers Principal Peter Shannon, will be brought against the Department of Defence over contamination caused by chemicals used in firefighting foam at a nearby army base.
Mr Shannon said the town had been treated with "callous disregard" by the commonwealth after two years of negotiation, including a direct recommendation from a Senate inquiry that residents be compensated.
"This agreement will provide the security and backing residents need in their fight for fair compensation and will enable us to carry a case of this magnitude through the courts," he said on Thursday.
Toxic firefighting foam has been leaching into the ground and water around defence sites across the country, including the Oakey Army Aviation base.
Queensland has already banned foam containing pollutants, including perfluorooctane sulfonate (PFOS) and perfluorooctanoic acid (PFOA).
The town's Chamber of Commerce last month warned the ongoing saga was stopping investment and unfairly tarnishing Oakey as "toxic".
The IMF agreement will indemnify litigant members against liability for the defendant's legal costs should the claim be unsuccessful.
The majority of legal costs associated with bringing the action would be borne by IMF, with the rest being carried by Shine, Mr Shannon said.
© AAP 2016