United States politicians have approved a $US20 million ($23 million) compensation payout to kidnap victim Jaycee Dugard, who was held imprisoned by a paroled sex offender for nearly two decades before being freed last year.

A bill detailing the compensation package for Ms Dugard and her two children passed through California's state assembly and senate and now awaits approval from governor Arnold Schwarzenegger, a state official said.

Ms Dugard, 30, and her daughters fathered by her alleged kidnapper, Phillip Garrido, had filed claims with the California Victim Compensation and Government Claims Board.

The payment had been recommended by California's Department of Justice.

A legislative analysis of the bill noted while California's corrections department usually has immunity from civil claims, Ms Dugard's case had a "unique and tragic character", including missed opportunities to catch Garrido.

State attorneys had warned potential jury damages arising from a lawsuit could be "extremely high," the analysis stated, saying it was a "virtual certainty" that Ms Dugard and her children would need counselling for the rest of their lives.

California's inspector-general David Shaw issued a blistering report into the case last November, saying a catalogue of mistakes allowed Garrido to walk free for years.

Garrido is accused of kidnapping Ms Dugard when she was 11 outside her home in South Lake Tahoe, California, in 1991, just three years after he was released from prison after serving only 11 years of a 50-year sentence for rape.

Ms Dugard was found alive in August after being imprisoned by Garrido for 18 years in a secret backyard compound of the sex offender's home in Antioch, east of San Francisco.

The case led to angry questions at how Garrido had been free to kidnap Ms Dugard and how authorities had failed to discover his crimes earlier, even though he was on parole and subject to tight monitoring by authorities.

- AFP