Around 90 councils, charities and churches have announced plans to sue global ratings agency Standard & Poor's for more than $200 million over toxic investments which plunged in value during the global financial crisis.

The organisations, including New South Wales and Western Australian councils, bought complex products issued by collapsed US investment bank Lehman Brothers, and won a class action lawsuit against the local arm of Lehman last year.

The products, known as synthetic collateralised debt obligations (CDOs), were linked to the US housing market.

Litigation funder IMF Australia says the investors will claim that the AAA and AA credit ratings S&P gave to the products were made without a reasonable basis.

It alleges that S&P falsely represented that its credit ratings on the CDOs were objective, independent and not influenced by conflicts of interest.

The liquidator of Lehman Brothers Australia has offered a settlement to former Australian clients of $211 million, or less than half the value of their investments.

The councils, churches and charities are expected to share around $70 million in compensation if the settlement is approved by creditors and the Federal Court.

IMF executive director John Walker says the compensation received from the Lehman Brothers case will be deducted from any successful claim for damages in the S&P case.

"Ratings agencies played a pivotal role in the misallocation of billions of dollars worldwide from 2005 to 2008, and it is important they be held accountable," he said in a statement.

Mr Walker says IMF is planning to file damage claims in Europe against banks, S&P, and rival ratings agency Moodys.

Last year, the Federal Court ruled that S&P had mislead 13 New South Wales councils when it gave top investment rankings to complex investments known as constant proportion debt obligations.

The court ordered S&P, European bank, ABN Amro, and investment manager Local Government Financial Services to pay damages of just over $20 million.

The companies have appealed against the ruling.