The "Erinnerung, Verantwortung und Zukunft" (Remembrance, Responsibility and Future) Foundation told the Sunday edition of Berlin's Tagesspiegel newspaper that the money remaining at the foundation's disposal had been earmarked for other purposes.

This week a Rome appeal court upheld damages claims from Italian soldiers who were interned and forced into labor by the Nazis in a ruling that could put German government assets in Italy at risk of being seized and sold.

German government spokesmen said they did not believe this was legally possible and added that Berlin was keeping its legal options open.

Speaking for the foundation, Manfred Gentz said: "There is no more money."

The soldiers did not qualify for payments to the foundation, which up until last year was still making payments to former forced laborers.

The foundation was set up by the German government in 2000 with 10 billion Deutschmarks (5 billion euros - $7.85 billion), funded half by the state and half by German business.

Billions were paid out to Holocaust survivors, former slave laborers and labor conscripts, including Italian civilians, but not to 600,000 Italian soldiers who were interned after fascist Italy declared a truce in September 1943.

The Nazis took control in Italy and deported many of the interned Italian soldiers to Germany to work in factories for no pay. Berlin says they were prisoners of war and there is no basis for the claim.

The foundation paid out 1.9 million euros (2.9 million dollars) to 3,395 Italians who were forced as civilians to work in Nazi Germany. Italian news reports say the ex-soldiers may claim as much as 60 million euros.