The grassy area on the fringes on Milltown Cemetery in west Belfast is believed to hold hundreds of unbaptised babies and infants, buried between the 1940s and early 1980s.
Under church rules at the time such children were not allowed to be laid to rest in sanctified ground.
A decision by the Cemetery Trustees nine years ago to lease it to the Ulster Wildlife Trust prompted an outcry from relatives who insisted the six acre plot held the remains of their loved ones.
Earlier this year the Diocese of Down and Connor apologised for the mistake after commissioning an archaeological survey to establish whether graves lay there.
Yesterday the church announced that an agreement has been reached between the diocese, the trust and the affected families that will see the land revested into the cemetery.
A spokesman for the diocese said the site would be turned into a commemorative garden.
"Agreement has been reached between Relatives of the Milltown Babies, the Milltown Cemetery Trustees and the Ulster Wildlife Trust about the future of the disputed land between the Bog Meadows and Milltown," he said
"As a consequence all of the 5.9 acres involved will be returned to the cemetery.
"In addition the transferred lands will be blessed and work will commence on a Commemorative Garden which is intended to be completed by Cemetery Sunday 2010."
A prayer service will be held on the land next Saturday to mark its return to the cemetery.
The Ulster Wildlife Trust will have limited access to one part of the land for specific purposes such as bird ringing.
This section, where no evidence of burials has been identified, will not be developed for at least a ten year period and will be reviewed at that time.
The spokesman added that should evidence of burials in this section emerge at any time, relatives of those involved will be given appropriate access.
On Good Friday this year, the Bishop of Down and Connor Noel Treanor apologised for the hurt and distress caused to the affected families.
"In the year 2000 the Trustees of Milltown Cemetery in good faith leased part of Milltown Cemetery to the Ulster Wildlife Trust," he stated.
"It has become apparent that part of the ground included in the lease contained the unmarked graves of babies and older people buried many years ago.
"On this Good Friday I, on behalf of the Trustees of the Cemetery, past and present, apologise to all those who have loved ones buried in this section of the cemetery and I regret the hurt and distress that this has caused."
Sinn Fein politicians were involved in the negotiations to revest the land.
Party president and West Belfast MP Gerry Adams said: "Paramount in this process has been undoing the wrong done to families many years ago," he said.
"Some of the relatives who have been affected by these events joined us in these discussions.
"Their persistence in campaigning has been rewarded with an agreement.
"I hope that this will give all of those families who have been affected over many years some peace of mind as we approach Christmas."
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