The settlement will go towards improving villagers' standard of living

It was accused of allowing Burmese troops guarding the project to rape, murder and enslave villagers.

The legal action was brought under a law allowing foreigners to sue US companies for abuses overseas.

Unocal, which reached an out-of court settlement, strongly denied any part in any human rights abuses.

'Eight long years'

The unspecified out-of-court settlement marks the end of an eight-year dispute between the villagers and the California-based firm over the $1.2bn (�600m) pipeline.

The violations are alleged to have taken place during the construction of the 62-km (39-mile) Yadana natural gas pipeline connecting Thailand to the Andaman Sea during the 1990s.

Lawyers representing the villagers said Unocal knew, or should have known, that rights violations would occur during the building of the pipeline.

"This means that this case is finally completely concluded after eight long years," said Dan Stormer, a lawyer for the villagers told the AFP news agency.

The terms of the settlement were kept confidential.

According to a statement from both parties, the funds will "develop programmes to improve living conditions, health care and education, and protect the rights of people from the pipeline region".