WELLINGTON, New Zealand — Palau agreed to accept 17 Chinese Muslims who have languished in legal limbo at Guantanamo Bay, indicating a resolution to one of the major obstacles to closing the U.S. prison camp.

The announcement today by the Pacific archipelago, which would clear the last of the Uighurs from the camp in Cuba, was a major step toward the Obama administration's goal of finding new homes for detainees who have been cleared of wrongdoing but cannot go home for fear of ill-treatment.

The U.S. feared the minority Uighurs would be tortured or executed as Islamic separatists if returned to China, but the Obama administration faced fierce congressional opposition to allowing them on U.S. soil as free men. The men were captured in Afghanistan and Pakistan in 2001, but the Pentagon determined that they were not "enemy combatants."

President Johnson Toribiong said the decision of Palau, one of a handful of countries that does not recognize China and maintains diplomatic relations with Taiwan, was "a humanitarian gesture" intended to help the detainees restart their lives. His archipelago, with a population of about 20,000, will accept up to 17 of the detainees subject to periodic review, Toribiong said in a statement.

Two U.S. officials, who spoke on condition of anonymity, said the U.S. was prepared to give Palau up to $200 million in development, budget support and other assistance in return for accepting the Uighurs and as part of a mutual defense treaty.