A third-party manager sent to Attawapiskat First Nation to handle the troubled northern Ontario community's money will be pulled out, the federal government saidThursday.

Government officials say that Jacques Marion, the appointed manager, would be withdrawn by April 19 because of progress in conditions on the reserve.

Aboriginal Affairs Minister John Duncan issued a statement Thursday night, saying that "in recognition of the accomplishments that have been achieved in substantially addressing the urgent health and safety needs of affected Attawapiskat residents through the third-party manager, we have notified the Attawapiskat First Nation of the department's intent to move the First Nation out of third-party funding agreement management and back to co-management."

A letter to Attawapiskat Chief Theresa Spence from Aboriginal Affairs dated April 5 says that the "imminent completion of work to install the 22 modular homes purchased by the third-party manager and to renovate the three existing homes for the occupancy of the 25 families, as previously agreed, is an achievement of which we can be justifiably proud."

NDP MP Charlie Angus, whose riding includes Attawapiskat, rejected the suggestion that improving conditions in the community were behind the government's decision.

"The third-party manager was put in place to punish the community for embarrassing the government," he said. "The reality is that they've blown this file and I think the government is trying to cover its tracks."

Meanwhile. Angus said he'd been trying for weeks to determine why money had not been released by Marion to students studying off-reserve, and was finally told Thursday by Aboriginal Affairs that the money would begin to flow and that the manager would be withdrawn, restoring things "back to normal."

He also questioned the benefit of assigning a third-party manager to Attawapiskat to bring in and install the trailers, when the operation faced many delays.

It "shouldn't be rocket science getting 22 trailers set up into a community, and yet we were weeks and weeks behind because of fights over payments because [the third-party manager] was out in Winnipeg," Angus told CBC News in an interview Friday.

"So the trailers are being set up, but again, this community ended up paying this guy $20,000 a month. I think anybody could ask the question, well, where was the value?".

The federal government announced Nov. 30, 2011, that it was sending in the third-party manager. Duncan said the community wasn't properly handling its money.

At the time, Spence said she was shocked they were being put under third-party management, which is the strictest move the government can make if officials think the band can't handle its own finances.

The reserve had been under co-management for 10 years before it was put under third-party management.

The community of 2,000 declared a state of emergency last October after a severe housing shortage forced at least two dozen families to live in temporary shelters, some without insulation or plumbing.

"I guess, as First Nations, when we do ask for assistance and make a lot of noise, we get penalized for it," Spence told CBC News at the time.

"So, you know, to put us in third party while we're in crisis, that's very shameful and a disgrace from the government."

Medium and long-term housing solution needed, Angus says

The community fought the third-party manager to federal court, but lost the case.

Angus said, now that the third-party manager is being removed, both provincial and federal officials need to sit down with Attawapiskat leadership and develop a medium and long-term plan to address the community's long-standing housing problems.

The 22 trailers were earmarked to help those in Attawapiskat who were living in sheds and tents, but there are people living in makeshift trailers without adequate fire protection and shacks overrun with mould, he said Friday.

"I would like to think that now that the government has decided to stop being confrontational, they've pulled the third-party manager out, they might sit down with the community and say, 'Look, we all need to work together to fix this.'"

With files from The Canadian Press