After months of negotiation, Taiwan and China have “reached an agreement” on how to respond to the deaths of two Chinese fishermen following a sea chase by Taiwan’s coastguard, Taipei said.

The settlement involves compensation to the victims’ families and the repatriation of their bodies to China, according to reports. Taiwan’s coastguard declined to share details.

The deal may reduce tensions in the sensitive Taiwan Strait, which Beijing claims as its own.

China had condemned the incident in February as “malicious” and started regular patrols around Taiwan’s Kinmen archipelago following it.

The regular patrols aimed to “maintain operational order in sea areas and safeguard fishermen’s lives and property”, Beijing’s coastguard said in February.

The two men who died were among four people on board a fishing boat which trespassed into Taiwanese waters off Kinmen on 14 February and resisted inspection.

The boat capsized when Taiwanese authorities gave chase and the two fishermen drowned while trying to flee.

Beijing and Taipei used to be more flexible about each other’s fishing fleets, especially around Taiwan’s off-shore islands, which lie extremely close to the Chinese coast. Kinmen – Taiwan’s northernmost archipelago – lies just 3km (1.9 mi) from China.

But in recent years Taiwan has been enforcing its own waters more strictly – a response to what it says is a massive increase in poaching by fishermen from China’s coastal Fujian province.

Kinmen residents have reported seeing an increased presence of Chinese dredging vessels in its vicinity.

China’s Taiwan Affairs Office had for months urged Taiwanese authorities to investigate the incident and offer assistance to the victims’ families. It also accused the self-ruled Taiwan – which Beijing sees as a breakaway province which will eventually be part of China – of “using various excuses to forcefully seize Chinese fishing vessels”.

Taiwan has defended its coastguard’s actions and called on Beijing to “restrain similar behaviours” on its waters.

On Tuesday, Taiwan’s coast guard director Chang Chung-lung apologised to the victims’ families “for the suffering [they have] endured” and also “for not recording evidence in this case”.

Both sides “will actively implement the agreed consensus as quickly as possible” said Hsieh Chin-chin, deputy director-general of the coastguard administration.

“We respect the families and the content of the consensus, so we are unable to provide further details,” Mr Hsieh added.

A spokesman for Taiwan’s Mainland Affairs Council revealed the compensation will be paid by private donors, while stressing it does not have any impact on the outcome of the investigation into what happened, and who was responsible.

Beijing said it hopes Taiwan will “actively implement the terms of the agreement to provide peace of mind to the victims and offer an explanation to their families”.