HELENA, Mont. — W.R. Grace & Co. has agreed to reimburse the federal government $250 million for the investigation and cleanup of asbestos contamination blamed for sickening hundreds of people, some fatally, in the northwestern Montana town of Libby.

Approval of a U.S. Bankruptcy Court judge is necessary to cement the agreement announced this past week by the U.S. Justice Department. The deal would settle a government claim to recover expenses for past and future costs of asbestos cleanup in Libby homes, businesses and schools.

Asbestos from Grace's former vermiculite mine near the town has been blamed for cases of lung-scarring asbestosis and for mesothelioma, a fast-moving cancer that attacks the lungs. The mine has been closed since 1990.

"Any judgment against Grace is a good one," Gayla Benefield of Libby said Tuesday. "This is a step forward; $250 million is nothing to sneeze at considering that in 1999 they were saying, 'We didn't cause the problem. We didn't do anything."'

Benefield has said she suffers health effects from asbestos exposure and lost both parents to asbestos-related diseases.

In a statement issued through spokesman Greg Euston, Grace said it is pleased with the agreement. Euston said the company, which is in Chapter 11 bankruptcy proceedings, had no other comment.

It has been eight years since the U.S. Environmental Protection Agency began removing asbestos-contaminated soils and other material in Libby. In 2001, the government filed a lawsuit to recover costs. A couple of years later, the EPA won a $54 million judgment for cleanup costs incurred through Dec. 31, 2001, but the money went unpaid while Grace was under bankruptcy protection. The settlement announced Tuesday includes that 2003 judgment, the Department of Justice said.

Taxpayers have been covering the bills for the EPA's investigative and cleanup work in Libby.

The agency's Libby project leader, Paul Peronard, said Tuesday that expenses so far have totaled about $168 million, including medical investigations. Peronard estimated another $175 million in costs are likely and said completing the remaining work in Libby could take three to five years.

The work has included removing contaminated soil around homes and businesses, plus removal of building insulation and debris containing asbestos. Years ago, asbestos-laced vermiculite was spread as a soil conditioner.

Peronard said cleanups have been completed at 954 properties and 450 remain on a cleanup list. Still to be decided: what to do about some 700 properties that are in the Libby area and are contaminated but do not meet removal criteria.