The decision was taken during the new government's first Cabinet meeting, a day after Maoist chief Pushpa Kamal Dahal "Prachanda" was sworn-in as Nepal's new Prime Minister for a second time.
At least 50 people were killed during the six months-long protests in southern Nepal districts last year following the promulgation of the new Constitution.
It was decided that Nepali Rs 1 million will be given to the families of those killed in the protests. The cabinet also decided to provide free medical treatment to those injured in the agitation.
The decisions were part of the deal ruling alliance Nepali Congress and CPN-Maoist Centre had signed with the Madhesis before the election of the Prime Minister in the Parliament.
The Madhesi parties had led the six months-long agitation, mainly to protest against the seven-province federal model enshrined in the Constitution.
The protests had also disrupted the supplies of petroleum products and cooking gas among other essentials to Nepal.