The families of 11 Israeli athletes killed by Palestinian attackers at the 1972 Munich Olympics have reached a deal with Germany over a long-disputed compensation claim, the German government has said.

Earlier this month, the families had threatened to boycott Monday’s 50-year anniversary ceremony in Munich organised by German authorities because they said the amount they had been offered was too low.

“The German government welcomes the fact that it has now been possible to reach an agreement with the relatives on an overall concept to mark the 50th anniversary,” a spokesman for German chancellor Olaf Scholz said.

“This includes the reappraisal of the events by a commission of German and Israeli historians, the release of files in accordance with the law, the classification and acceptance of political responsibility within the framework of the commemoration ceremony, as well as the provision of further recognition services by the federal government, by the state of Bavaria and by the city of Munich,” spokesman Steffen Hebestreit said.

The German news agency dpa and other media reported that Germany had increased its offer to the families to around 28 million euros (£24 million), up from the initial 10 million euros (£9 million) offer to the families, which would have included the payments already made.

Of this, the federal government is to bear 22.5 million euros (£19.4 million), the state of Bavaria five million euros (£4 million) and the city of Munich 500,000 euros (£431,000), dpa reported.

The German government has not publicly revealed how much money it has offered.

The German president and his Israeli counterpart Isaac Herzog welcomed the agreement.

“We are pleased and relieved that an agreement on historical clarification, recognition and compensation has been reached shortly before the 50th anniversary,” Mr Steinmeier said in a joint statement with Mr Herzog, who will visit Germany next week and participate in the ceremony.

“The agreement cannot heal all wounds. But it opens a door to each other,” the statement said.

“With this agreement, the German state acknowledges its responsibility and recognises the terrible suffering of the murdered and their relatives, which we will commemorate next week.”

The negotiations over the amount of compensation and the release of further historical documents had been a lingering point of friction between the two countries that have built strong ties despite the enduring legacy of the Nazi Holocaust, in which six million Jews were murdered during the Second World War.

Members of the Palestinian group Black September broke into the Olympic Village, killed two athletes from Israel’s national team and took nine more hostage on September 5 1972.

The attackers hoped to force the release of Palestinian prisoners held by Israel as well as two left-wing extremists in West German jails.

All nine hostages and a West German police officer died during a rescue attempt by German forces.

Relatives of the athletes accuse Germany of failing to secure the Olympic Village, refusing Israeli help and then botching the rescue operation.

Immediately after the attack, Germany made payments to relatives of the victims amounting to about 4.19 million marks (£1.7 million), according to the the country’s interior ministry.

In 2002, the surviving relatives received an additional three million euro (£2.5 million), Germany’s dpa news agency reported.