The lawsuit against Austria came on the day that German Chancellor Gerhard Schroeder presented a bill to parliament for the creation of a $5bn dollar fund to compensate Nazi-era slave and force labourers.

The suit seeks damages for people forced to work as slave labourers

The suit targets some 80 Austrian industrial firms and banks, such as privatisation agency OeiAG, and Dorotheum, Austria's state-owned auction house.

The move comes at a time when Austria is faced with diplomatic isolation following the inclusion of the far-right Freedom Party in the Austrian Government.

"With the current environment in Austria, it was necessary for us to articulate the breadth, nature and extent of the legal claims that must be addressed if Austria is ever to get legal peace for Holocaust-related claims," said Ed Fagan, a New-York based lawyer who filed the suit.

Austria's new coalition government has appointed a special official to work on compensation payments to forced labourers.

But the official has not yet dealt with the issue of compensating people whose property was seized by the Nazis.

Quick payments

The Austrian Government has said it wants to compensate slave labourers quickly.

But the US has asked the Austrian authorities to address the issue of compensation for seized property at the same time.

However, the Austrian authorities criticised the lawsuit, saying it would be quicker to compensate slave labour claims before moving on to compensation for stolen property.

"I don't have the ambition to deal with Fagan now," said Austrian Chancellor Wolfgang Schuessel, lead of the conservative People's Party.

"Austria has offered a gesture to the victims," he said.