An "in-principle" settlement has been reached between the Australian Government and residents of three communities who had their groundwater contaminated by toxic firefighting foams used at defence bases until the early 2000s.

Key points: PFAS has been found to cause reproductive and developmental effects in laboratory animals

PFAS has been found to cause reproductive and developmental effects in laboratory animals Three communities in Queensland, New South Wales and the Northern Territory brought class actions

Three communities in Queensland, New South Wales and the Northern Territory brought class actions The chemicals bio-accumulate in soil and do not breakdown

Residents from Williamtown in New South Wales, Oakey in Queensland and Katherine in the Northern Territory had each brought class actions, which contended that the Department of Defence was liable for depressed land values and business outlooks.

The groundwater was found to be contaminated in each community, following the widespread use of per-and poly-fluoroalkyl substances (PFAS) — chemicals that do not breakdown and instead bio-accumulate in soil — which were widely used in firefighting foams at defence bases.

Authorities overseas, including the US Environmental Protection Agency (EPA), have found PFOA and PFOS chemicals (a type of PFAS) can cause reproductive and developmental, liver and kidney, and immunological effects in laboratory animals.

In a joint statement from the Minister for Defence, Linda Reynolds, and the Minister for Veterans Affairs, Darren Chester, the Government said the parties were finalising the confidential terms of a settlement.

The bore water on a property near RAAF Base Tindal was found to contain PFAS chemicals in the groundwater. ( ABC News: Sally Brooks )

"The Australian Government has reached an in-principle agreement to settle three Federal Court of Australia class actions relating to per-and poly-fluoroalkyl substances (PFAS)," the statement said.

"These terms are confidential and are subject to formal consideration and approval by the Federal Court of Australia."

Residents of Williamtown had been represented by Dentons law firm, which said in a statement that the result was a vindication for the town.

Lindsay Clout, the president of the coalition against PFAS, told the ABC he got the news of the settlement just before midnight and had not been able to sleep afterwards.

"I was a little bit numb," he said.

"You hope for something for so long, and then when it happens you sit down and think … did that really happen?

"It gives people a future — that's the fundamental thing that had been taken away from us, our properties are now not fit for purpose, and because of the stigma of the contamination, the property values have collapsed."

Williamtown residents say the settlement is vindicating. ( ABC News: Carly Cook )

Mr Clout said while his community of Williamtown were proud of the result, the fight was far from over.

"Defence has committed huge amounts of money to clean up the base, and they're making good headway on it, but the fight's not over because the clean-up continues," he said.

"There are a lot of other communities across the country that are starting the journey similar to ours, but what's happened will certainly give them hope there is a future for them."

Williamtown residents Cain and Rhianna Gorfine were instrumental to the class action, and Mr Gorfine said the legal action had taken a huge mental and economic toll.

"Once it sunk in, I think [I felt] a real feeling of vindication that we have been right this whole time," he said.

Cain and Rhianna Gorfine say the class action has taken a huge mental and economic toll. ( ABC News: Carly Cook )

Some residents had been represented by law firm Dentons, who said in a statement that the result was a vindication for the town.

Shine Lawyers had also commenced legal proceedings and commissioned celebrity American activist Erin Brockovich to publicly lobby on their behalf.

In a statement, Ms Brockovich said the settlement was a victory, and a credit to the people of Katherine, Oakey, and Williamtown.

"[They] had the courage to rise up and fight for their communities," she said.

"I know better than most how gruelling and time-consuming class actions can be so I want to congratulate residents for never giving up hope.

"I'm sure there were times you felt nobody was listening but this settlement is both an acknowledgement of your struggle and a chance to turn the page on this difficult chapter in your lives."

There are still hundreds more sites across Australia which have been contaminated by the toxic chemical compounds.

Erin Brockovich warned all levels of government in Australia to act swiftly to prevent the spread of PFAS chemical contamination. ( ABC News )

Northern Territory senator Malarndirri McCarthy co-chaired a parliamentary committee into PFAS contamination across Australia.

She said while she welcomed the news of the settlement, the Government had still not responded to the committee's report which was tabled 18 months ago.

"We tabled that report in late 2018 with numerous recommendations to the Federal Government — they have yet to respond to that," Senator McCarthy said.

"And the most despairing part of that, is that all these families who gave evidence to our enquiry in 2018 are still waiting for a formal response and respect from the Parliament as to what's going on with their lives and their concerns around PFAS contamination."

Defence said in the statement that the Government would continue to engage with communities, and that it recognised the "difficult journey for many people over the past few years".

"The Government remains committed to concluding the environmental investigations into PFAS contamination on and near defence facilities across Australia, and to the ongoing monitoring and engagement with communities once investigations are complete," the statement said.