Iceland says it's successfully launched a debt cancellation project for mortgage holders which should benefit around half of the country's households.
The amount cancelled from each debt could be as much as 26,000 euros ($A39,000).
On Sunday, the island nation's tax authorities inaugurated the site 'leidretting.is', where Icelanders can file their application.
In the first two hours, 5000 people registered on the site, according to a technical manager cited by Icelandic daily Frettabladid.
The Icelandic parliament passed a bill on Friday allowing borrowers to request a debt cancellation, entirely financed by the state.
During the campaign for the general election in April last year, the debt relief plan was the main election pledge of the winning Progressive Party (centre) of Prime Minister Sigmundur David Gunnlaugsson and his conservative ally, the Independence Party.
The key measure is the capital reduction of the debt for households - regardless of income - with inflation-indexed mortgages.
The debt reduction will depend on the borrowed amount and will have a limit of four million kronur ($A39,000).
The government expects the plan will benefit 69,000 of the total 124,000 Icelandic households.
Icelandic banks almost invariably offered inflation-indexed mortgages before the collapse of the country's financial system in 2008.
One of the effects of the crisis was a soaring inflation rate connected to a weak krona, which caused a major hike in household debts.
In 2012, 36.7 per cent of households said they had difficulty making ends meet while 11.5 per cent said they faced "great difficulty".
The plan has triggered controversy in Iceland and abroad attracting warnings from the International Monetary Fund, the OECD and rating agency Standard and Poor's, due to its high cost and uncertain economic consequences.
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