Under the proposed law, which needs to be approved by parliament, soldiers who were convicted by military courts for being gay, demoted or who otherwise saw their careers damaged because of their sexual orientation, would receive a "symbolic amount" of 3,000 euros ($3,500).

"We cannot erase the suffering inflicted upon these people," Defence Minister Annegret Kramp-Karrenbauer told the RND newspaper group. "But we want to send a signal" and "turn the page on a dark chapter in the history of the armed forces", she said.

The compensation would apply to soldiers from the Bundeswehr, which was created in West Germany in 1955, and to troops from former East Germany's National People's Army, founded in 1956.

The defence ministry estimates that about 1,000 people would be eligible for a payout.

Military court judgments against soldiers for engaging in consensual gay sex acts would also be quashed under the draft bill.

It took until 1969 for homosexuality to be decriminalised in West Germany, but discrimination against gay servicepeople continued for much longer, including after Germany was reunified in 1990.

Gay soldiers could expect to be overlooked for promotions or removed from positions of responsibility, with senior officers often deeming them a "security risk" or a bad example to others.

That ended with a law change in 2000 that officially protected gay, lesbian and bisexual people from discrimination in the armed forces.