One of the world's most polluted rivers, the Citarum in Indonesia, is about to receive a massive clean-up that will improve the lives of millions of people, the Asian Development Bank (ADB) said Friday.

The regional bank said it had agreed to provide a 500-million-dollar multi-tranche loan package to support Indonesian government efforts to rehabilitate the strategic but horribly polluted river on Java island.

The loan, to be delivered in chunks of 50 million dollars over 15 years, is part of the government's 3.5-billion-dollar plan to restore the Citarum and improve the lives of 28 million people who depend on it in some way.

ADB Senior Water Resources Engineer Christopher Morris said pollution levels in the river compromised public health, while the livelihoods of fishing families had been hit by the widespread death of fish.

"The Citarum River basin urgently needs improved management and significant infrastructure investments," he said.

"ADB's initial assistance will provide safe water supply and sanitation facilities for poor families who currently use water from the polluted canal for bathing, laundry and other uses.

"It will also allow the cultivation of an additional 25,000 hectares (62,000 acres) of paddy, benefiting 25,000 farming families."

He said the loans would bolster local efforts to integrate water management along the river, which stretches from Bandung in central West Java province to the capital Jakarta, some 160 kilometres (100 miles) to the northwest.

Once it reaches the capital it becomes a canal bubbling with industrial and household waste, but it still provides 80 percent of the surface water supply to the city of 12 million people.

Along the way it is lined with hundreds of small-scale industries, only about 20 percent of which are estimated to have waste water treatment programmes.

Dozens of villages also use the river as a place to dump their untreated sewage and household garbage.

Morris said the ADB and the Indonesian authorities would work together with local communities to try to "stop some of the behaviour" that makes the river a "dumping site for all the household waste."

This would involve small-scale projects to build sanitation facilities in villages along the river, as well as larger waste water treatment plants.

"There's a direct correlation between a lack of water supply, and a lack of sanitation, and poverty in the Citarum River basin," Morris said.

"The communities with toilets and better water supply and the communities which are protected from flooding ... are wealthier."

A health ministry survey published in The Jakarta Globe daily this week showed that 40 percent of households in the country of 234 million people were not fitted with toilets.

It found that 25 percent of households did not have a septic tank or other system for disposing of human waste, and only 73 percent had garbage disposal facilities.

But not everyone is impressed with the Citarum plan. A local advocacy group, the People's Alliance for Citarum, is protesting over a plan to relocate scores of families as part of the river's rehabilitation.

The alliance has called on the ADB to abandon the scheme, according to The Jakarta Post newspaper.

But the ADB said the plan to rehabilitate the Citarum would benefit millions of people in Jakarta, where 200,000 more households would receive bulk water supplies, and the wider river basin.

Of some 870 households that will be affected by the project, losing part or all of their land, 117 would have to have be relocated, it said.

All the affected households would be compensated for the replacement cost of their lost properties or costs associated with moving and loss of income.