Chancellor George Osborne has confirmed that the government will provide £25m in cash and a £175m loan to the Presbyterian Mutual Society (PMS).
The PMS crashed in November 2008, owing almost 10,000 investors money.
Since then, larger savers got 12% of their money back. But, those with less than £20,000 saved got nothing.
Speaking during his Spending Review speech, Mr Osborne said he recognised that savers with the society had suffered for "far too long".
In April, a proposal put forward by the Northern Ireland Executive included plans for the Treasury to provide a loan of £175m.
It was understood that the money would be lent to the administrator who would pay the money back through rental income from PMS properties and eventual asset sales when the market improved.
That plan also included a £50m fund for savers.
The administrator Arthur Boyd said the Treasury's provision of funding for that plan would be a basis for "speedier return of capital to members/creditors than would otherwise have been the case through the administration process".
"There are complex matters to be resolved in terms of how the funding will be applied and in due course I would plan to make a proposal to members/creditors for them to vote upon.
"The specifics of that proposal cannot be formulated until I have further details," he added.
Stafford Carson, the former Presbyterian Moderator who is leading the church's response to the crisis, welcomed the development and said it would come as a relief to those involved.
He added that the church was urging the Prime Ministerial Working Group, set up to deal with the PMS crisis, to "work without delay towards a just and fair resolution".
The Ulster Unionist Party leader Tom Elliott also praised the chancellor's announcement, describing it as a "huge boost".
He said: "The funding put forward today by the chancellor offers hope for thousands of savers, many of whom have lost their life savings.
"Now those who had invested less than £20,000 will be able to retrieve more of their money than would have been possible under the previous government."
The Chancellor also announced £1.5bn of compensation for Equitable Life customers who lost money when the company nearly collapsed ten years ago.