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In an unprecedented move, Home Secretary Jack Straw said he had reconsidered his earlier ruling that Bentley's family was not entitled to an ex-gratia compensation payment.
Bentley's surviving relatives, his brother Dennis and niece Maria Bentley-Dingwall, have been seeking compensation since the Court of Appeal quashed his murder conviction last July.
The payment the Bentley family receive will be determined by independent assessor Sir David Calcutt QC.
Explaining why he had reversed his stance on compensation to the Bentley family, Mr Straw said there had been changes in the law since he made his original decision. They meant meant he should have taken into account errors made by the original trial judge, the former Lord Chief Justice Goddard.
"I have today informed the relatives of Derek Bentley that, because of developments in the law, I have reconsidered their application for compensation in respect of Mr Bentley's wrongful conviction," he said in a statement. "I have decided that compensation is payable."
Mr Straw said a judgment of the Divisional Court, delivered after his earlier decision, prompted the Bentley family's solicitors to request that he looked again at that decision.
In doing so, he said, he had decided the judicial errors were all serious, "but it is not my view that all of the judicial errors in this case, if they had occurred in isolation or even if some of them had occurred together, would be of such quality as to give rise to exceptional circumstances.
"However, I have concluded that the number and collective gravity of the judicial errors in the case, not least reflected by the, I believe unprecedented, way in which the Court of Appeal censured the trial judge, do constitute exceptional circumstances for the purposes of the ex-gratia scheme."
Bentley, 19, was convicted of the murder of Pc Sidney Miles in November 1952, and hanged just two months later, although it was acknowledged that his 16-year-old accomplice Christopher Craig had fired the fatal shot. He was finally cleared more than 45 years later in 1998, when the Court of Appeal quashed the conviction on the basis that the trial judge's summing up and direction to the jury had denied him a fair trial.
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