Michigan will pay $600million to the families affected by lead-contaminated water in Flint.

Governor Gretchen Whitmer announced the payout on Thursday.

"What happened in Flint should have never happened, and financial compensation with this settlement is just one of the many ways we can continue to show our support for the city of Flint and its families," she said.

The settlement will bring to a close numerous civil lawsuits targeting multiple government defendants, including the state of Michigan, former Republican Governor Rick Snyder, the Michigan Department of Environmental Quality, and numerous state defendants.

Attorneys Ted Leopold and Michael Pitt, who led the class-action litigation, said the ruling brings a measure of justice for the victims.

"The residents of Flint were victims of horrendous decisions by the state, its employees, and other defendants that have resulted in tragic and devastating consequences," Mr Leopold said, according to the Lansing State Journal.

"While we can never undo the damage that occurred to the citizens and community of Flint, we are pleased that today we were able to secure a measure of justice for the ... Flint community."

In addition to the monetary reward, the settlement will establish a victim's compensation fund, from which victims of the water crisis can access the hundreds of millions of dollars in compensatory funds. The funds will be monitored by the courts.

The state will also create a specific fund for the education of students who have suffered long-term health and behavioural problems tied to the polluted water.

The recipients of the money will largely be individuals who were children at the time of the 2014 crisis. Around 65 per cent of the money will be distributed to residents who were six and younger when they were first exposed to the tainted water. Ten per cent will go to those who were between the ages of 7 and 11, and about 15 per cent will go to adults. Three per cent will be paid out for property damages.

The funds are prioritised residents who were children at the time of exposure because lead is extremely toxic and can cause brain development issues in children.

"The kids in Flint at every turn have been unnecessarily victimized by the circumstances of their life, poverty, a government that was dishonest with them," Corey M Stern, the lead counsel for the plaintiffs, told The Washington Post.

"To these kids, there's been a hell of a lot of losses. And I don't know of many wins ... [but] this is a big win for them, and it's beyond the money. It's what it says."

Black residents make up 57 per cent of Flint's population, and the city's median household income $26,330, far below the country's average of $61,937. The city is part of the larger Rust Belt region, which has seen mass depopulation and de-industrialization as manufacturing jobs - like auto assembly workers in Michigan and steel mill workers in Ohio and Pennsylvania - were eliminated thanks largely to outsourcing made possible by NAFTA.

The Flint water crisis began in 2014 when the city stopped using Lake Huron as its water source and temporarily began drawing water from the Flint River. The decision was a cost saving measure determined by un-elected emergency managers from the state who were overseeing the city at the time.

When residents began to complain of rashes and illnesses after the change in water supply, they were largely ignored until a team of researchers conducted water tests in the city and found the lead contamination, which forced the city leaders to act.

The water from the Flint River required higher levels of chlorination to treat, which caused corrosion in resident's pipes, resulting in lead seepage into the populace's drinking water.