Lord McAlpine will receive a payment of £185,000 after a settlement was reached with the BBC over false claims made in a Newsnight report, his lawyers have confirmed.
The terms of the agreement will be announced in court in a few days' time, according to RMPI LLP, the solicitors to the former Conservative Party treasurer.
Lord McAlpine said: "I am delighted to have reached a quick and early settlement with the BBC. I have been conscious that any settlement will be paid by the licence fee-payers, and have taken that into account in reaching agreement with the BBC.
"We will now be continuing to seek settlements from other organisations that have published defamatory remarks and individuals who have used Twitter to defame me."
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A BBC spokesman said: "The BBC has agreed terms with Lord McAlpine to settle his claim of libel against the Corporation.
"The settlement is comprehensive and reflects the gravity of the allegations that were wrongly made."
Lord McAlpine will also receive costs under the terms of the agreement.
His lawyers have warned that legal action is also being prepared against ITV's This Morning and a lengthy list of Twitter users who identified the peer's name in connection with false sex abuse claims - and that it would cost them "a lot of money".
Lord McAlpine said the damage of the Newsnight report "can't be repaired" and he has to live with the legacy of suspicion.
He said that his legal team would ensure that anyone who brought the matter up again was "very, very foolish".
In an interview for Radio 4's World At One, Lord McAlpine said the BBC could have saved "a lot of agonising and money" by simply calling him before the programme went out.
Ofcom said today that it was investigating the broadcast, which led to the resignation of BBC director-general George Entwistle and has further fuelled the crisis which has gripped the corporation since the Jimmy Savile scandal broke.
The regulator is investigating ITV1's This Morning after presenter Phillip Schofield brandished a list of names of alleged abusers which he had found on the internet and handed it to the Prime Minister during a live interview, asking if he would investigate them.