Up to 600 Afghans who worked as interpreters or in other dangerous roles supporting British and allied forces in Helmand will be eligible to resettle in the UK, Defence Secretary Philip Hammond has said.
Other locally-engaged staff will be paid to enrol on training courses lasting up to five years in Afghanistan or given a severance payment equivalent to 18 months' salary.
Mr Hammond told MPs the resettlement package would be available only to staff who were in post on December 19 last year when Prime Minister David Cameron announced the drawdown of UK forces, and who had served for more than 12 months.
In a statement to MPs Mr Hammond said: "The government recognises the contribution and commitment of all local staff. They have played a vital role in contributing to our shared goal, a more secure, stable and prosperous Afghanistan.
"Without them, the UK's contribution to the international mission would not have been possible. We pay tribute to those who have made the ultimate sacrifice and those who have been injured whilst working with us.
"The future of Afghanistan lies in the hearts and minds of such people, who have done so much to move their country forward. Having invested so much already, the government wants to encourage local staff to stay in Afghanistan and to use their skills and knowledge to make it stronger, better able to meet the challenges ahead and to seize the opportunities."
The Government expects around 1,200 Afghans will qualify for some form of redundancy package, including the offer of training supported by a "living stipend" or a severance deal, paid monthly. Of those, up to 600 may be eligible for the option of resettlement in the UK along with their families.
Mr Hammond said: "The Government acknowledges that some local staff, such as interpreters, have worked in particularly dangerous and challenging roles in Helmand.
"In recognition of this unique and exceptional service to the United Kingdom, these local staff and their immediate families will be offered a third option, resettlement in the UK.
"In order to help them adjust to life in the UK, they will be offered initial assistance and accommodation including access to benefits, as well as support in seeking employment.
"To be eligible for resettlement in the UK, local staff must have routinely worked in dangerous and challenging roles in Helmand outside protected bases. Seriously injured staff, who might have qualified had their employment not been terminated due to injuries sustained in combat, are also included.
"Local staff who were contracted by the UK, but who mostly worked for Danish or Estonian forces and who meet the criteria above, are also eligible."
The Defence Secretary said staff who were eligible for resettlement "may choose to stay in Afghanistan to help build its future, supported by the training and financial packages".
Mr Hammond said that staff who did not meet the eligibility criteria but who faced threats to their safety in Afghanistan would also be considered for resettlement "in the most extreme cases".
He said: "Our existing intimidation policy will remain in place for all local staff, regardless of their date and duration of employment. This ensures that local staff who face real threats to their own and their families' safety, now and in the future, are supported.
"The policy offers relocation within Afghanistan and, in the most extreme cases, the possibility of resettlement in the UK. We are currently reviewing the policy to ensure it continues to provide a fair and robust system of assessing threats to, and ensuring the protection of, our local staff."
Campaign group Avaaz, which has been championing the interpreters' cause, welcomed the announcement but said the new plans remained"half-baked" and would leave hundreds of translators at risk.
Alex Wilks, Campaign Director for Avaaz, said: "This deal may sound great in London, but could be lethal in Kabul. "Today's Afghan proposal remains half-baked and does not offer the escape route that Iraqi translators received.
"Public pressure has helped throw a lifeline to hundreds of Afghans, but sadly many brave men who've supported British troops risk being left behind."
Avaaz said the plans would only help around half of Afghan interpreters who were at risk due to their work with British forces.
The organisation said some translators such as one, known only as Abdul, who started a petition to be allowed to settle in the UK could be left behind if they did not qualify under the terms of the scheme.
Rafi, an Afghan interpreter currently in Britain, said: "This deal will still leave many people to the mercy of the Taliban. "Given all that the Afghan translators did for the British Army, this deal seems to be nothing like what was offered to the Iraqis.
"If the Government applies this deadline of 19 December 2012, then only half the translators will benefit from this deal."
Avaaz said under the new deal only those who had worked as an interpreter for over a year, on the front line and continued to work since the British troop drawdown started in December could apply, while others facing threats could apply under an 'intimidation policy'.