Drunken trees and furry armadillos in one of the most inaccessible areas of the world are to be protected under a £10 million plan.

In an agreement to be officially sealed tonight, the World Land Trust (WLT), a British conservation charity, will take over joint management of a million hectares of forest in the Chaco, northern Paraguay, which had faced being ploughed up to make room for soya and biofuel crops. The WLT will share responsibility with Guyra Paraguay, a non-governmental conservation organisation.

Three national parks and huge tracts of private and government-owned land are included in the deal under which the WLT intends to raise £10 million for a trust fund to pay for the long-term management of the area, including paying for wardens recruited from indigenous populations.

The Chaco, which extends into Argentina and Bolivia and is twice the size of Wales, is home to a wide variety of animals, including the Chaco giant peccary, which resembles a hog and is the size of a pony but was known only from fossils until 1975.

The other wildlife includes Columbina doves, which are found in such quantities that they have been compared to the huge flocks of passenger pigeons that were found in North America until they were driven into extinction.

At five inches long and unusual in being covered in fur, the fairy armadillo is one of the oddest creatures of the Chaco. Other animals at home there include the giant armadillo, giant anteater, giant otter and jaguar.

The Chaco forest is perhaps best known for its palo borracho trees, forming the so-called drunken forest because they store so much water in their trunks that when they lean over they are said to resemble beer-bellied drunks. “Axe-breaker” quebracho trees were once common but now survive in the Chaco as a rare species. They were cut down in their thousands to provide sleepers for South America’s rail network.

John Burton, chief executive of the WLT, said: “This is certainly the biggest challenge that the WLT has faced in its 20-year history. It is vital that we rise to the challenge, to do as much as we can for the future of the world’s wild places. We must save this wonderful habitat, and we must work with the people who live there.”

Carlos López Dose, the Paraguayan Environment Minister, said: “We sincerely appreciate the support and the effort that is being carried out by our foreign friends in terms of the conservation of our Chaco. We welcome the international cooperation to join our conservation efforts on behalf of what remains of these, among the last great natural landscapes of the world. What we are doing today, signing this agreement, is of historical value for Paraguay.”

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