Construction work on what is to be French Polynesia's main hospital is expected to resume by July.
The newspaper, La Depeche de Tahiti, reports that the territorial president, Gaston Flosse, and officials from French building company, Bouygues have reached an agreement over the stalled project.
Mr Flosse is to pay the company one million U.S. dollars for work completed to date in a deal which ends Bouygues's commitment to the five story, 562 bed hospital.
The agreement also requires that both parties not seek any further financial compensation or lodge further complaints.
Last month, Bouygues announced it was pulling out of the project after a cost-sharing arrangement went sour due to spiralling costs.
Legal action was launched against the company last year after it sacked 140 construction workers.
Mr Flosse says the Taaone-Pirae project will be completed through assistance from France and the territory.