Oil and petrochemicals giant Shell has offered $90 million to settle a lawsuit brought on behalf of nearly 1,500 residents of a California neighbourhood seeking damages for soil contamination dating back to the 1960s.

Residents of the Carousel Tract, near Carson, who bought homes that were built more than 50 years ago, claim a broad spectrum of illnesses, including cancer, blood disorders, headaches and asthma relating to exposure to benzene, methane and other toxic chemicals. They are also seeking damages for reduced property values.

Shell up to now has denied responsibility for the problems, but the Los Angeles Regional Water Quality Control Board has blamed the international group for leaving behind "tonnes of waste oil" underground from a tank farm it operated at the site from the 1920s to the 1960s.

Since 2008, environment authorities have found traces of petroleum products at depths they said posed a threat to ground water.

The property has since changed hands several times, with a developer last selling to Dole Food, a company Shell says should accept responsibility for the clean-up in progress.

Carson's city government, which has joined the residents' lawsuit but is also negotiating separately with Shell, believes the oil company should purchase and raze the home rather than just exchanging the soil.

A Shell spokesperson told local media that it has decided to offer a settlement so that it can remove litigation as a barrier on the path to having its remedial action plan approved and implemented as soon as possible.