The Centre has agreed to release Rs 400 crore immediately to Orissa from the Compensatory Afforestation Management and Planning Authority (CAMPA) fund.
Though the state government had deposited over Rs 1350 crore in the account since 2004-05, no money was released to the state from this kitty till date.
The remaining funds due to the state will be released over next five years in a phased manner, sources said.
The state government recently opened a separate account to maintain the funds under the CAMPA scheme, thus paving the way for release of the fund.
The issue was raised by chief minister Naveen Patnaik in the recently held national conference of state ministers of environment and forests, chaired by the Prime minister, in New Delhi.