"We have delivered history today," the United Arab Emirate's COP28 president Sultan Al Jaber told delegates who stood and applauded after the decision's adoption in Dubai.

The announcement was followed immediately by financial pledges, including 225 million euros (US$246 million) from the European Union, $100 million from the United Arab Emirates, another $100 million from Germany, $40 million from Britain, $17.5 million from the United States and $10 million from Japan.

After years of dragging their feet on the issue, wealthy nations backed the fund in a landmark agreement at the COP27 summit in Sharm el-Sheikh, Egypt, last year.

Its launch on the first day of COP28 follows fraught negotiations on the mechanics of the fund, which will be housed at the World Bank on an interim basis.

"This sends a positive signal of momentum to the world," Jaber said.

He said it was "the first time a decision has been adopted on day one of any COP and the speed in which we have done so is also unique, phenomenal and historic."

"This is evidence that we can deliver. COP28 can and will deliver," he added.

But the money pledged so far fall well short of the $100 billion that developing nations -- which have historically been least responsible for greenhouse gas emissions -- have said are needed to cover losses from natural disasters.

"The progress we've made in establishing a loss and damage fund is hugely significant for climate justice, but an empty fund can't help our people," said Madeleine Diouf Sarr, chair of the Group of the 46 Least Developed Countries.

The Alliance of Small Island States -- among the most impacted by rising seas and other effects of climate change -- said "the work is far from over".

"We cannot rest until this fund is adequately financed and starts to actually alleviate the burden of vulnerable communities," it said.

"Success starts when the international community can properly support the victims of this climate crisis, with efficient, direct access to the finance they urgently need," the group added.

Rachel Cleetus, policy director of the climate and energy program at the Union of Concerned Scientists, said the financial commitments should be "in the billions, not millions".

"Millions would be an insult given what's happening already around the world," Cleetus told reporters.

"We want to hear the starting point is a conversation about billions and then a plan to scale it up by 2030 so that it meets the needs that are clearly rising," she said.

The fund will be housed in the World Bank for four years, a decision that developing nations begrudgingly accepted as the Washington-based institution is dominated by Western powers.

Its board members must now be appointed and represent wealthy and developing nations, and their first steps will be critical in building up its credibility.

A European diplomat said the first contributions will enable the financing of pilot projects and to test how the fund works before seeking more money "in a year or a year-and-a-half".

Developed countries, the US chief among them, insisted that contributions be on a voluntary basis, and want richer emerging powers such as China and Saudi Arabia to open their wallets, too.

US climate envoy John Kerry said the government would work with Congress to provide the $17.5 million pledge and said the US expects the fund to "draw from a wide variety of sources".

Richard Sherman, the South African co-chair of the committee that oversaw negotiations, acknowledged that "the outcome might not be satisfactory to all people.

"We certainly know that our colleagues in civil society have been shouting at us."