Parguay's lawmakers have voted in favor of the Financial Rehabilitation bill to support campesinos overwhelmed by debts.
The workers, who have been holding protests for three weeks in the capital Asuncion, brought the city to a standstill once more prior to the vote.
The legislation, introduced by the progressive Guasu Front, will fund and restructure the debts of campesinos who own of less than 30 hectares with subsidies of up to US$10,000 per person.
The conservative government has always publicly refused to cancel their debts, favoring instead a state funding solution — as agreed in a deal last year following 23 days of demonstrations.
But 12 months later, the campesinos said that the government had failed to fulfill its part of the agreement and demanded lawmakers pass a bill addressing their concerns.
Some members of the government had maintained that the system of state-funding proposed, corresponded to the de facto cancellation of the campesinos' debts, and therefore the legislation was not needed.
But now that the lower chamber approved the bill, one week after senators did, the government announced says it will follow suit.
Pedro Alliana, president of the governing Colorado Party, said that President Horacio Cartes will sign the bill in order to avoid further "tensions" in society.
The campesinos, who came from all over the country to demand the government to support family agriculture, announced that they will not go back home until the bill is signed.
Their representatives will meet with the Budget Ministry in order to deliver the list of campesinos who will benefit from the subsidies.
Around 17,000 people are said to be affected and the total debt is believed to run to US$34 million.
The nation has one of the biggest campesino populations in South America: about 35 percent of the country's population work on the land.
Land ownership has long formed the basis for bloody disputes in Paraguay, where the state often acts in the interests of the elite.
2.6 percent of landowners hold 85.5 percent of Paraguay’s lands while 91.4 percent of campesinos — with properties smaller than 20 hectares — hold only 6 percent, according to the 2008 agriculture census.