The former Conservative politician who was wrongly linked to a child sex abuse scandal by the BBC has reached a settlement with the corporation.
Lawyers for Robert McAlpine indicated they were taking legal action after the programme led to the peer being mistakenly implicated in a paedophile ring that targeted children at a care home in Wrexham in north Wales.
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."
The politician will receive £185,000 in damages and the terms of the agreement will be announced in court in a few days, his lawyers told Britain's Press Association.
Mr McAlpine said in a statement he was delighted to have reached a "quick and early" settlement and now will seek settlements from people who had named him on Twitter.
He said the Newsnight investigation, which has fuelled a crisis at the corporation and led to the resignation of BBC director-general George Entwistle, had left him devastated.
He added the whole matter could have been avoided if BBC investigators had called him and offered him the right to reply to the allegations before the report was aired.
Mr McAlpine told BBC Radio 4's The World at One programme: "They could have saved themselves a lot of agonising, and money actually, if they had just made that telephone call.
"They should have called me and I would have told them exactly what they learned later on - that it was complete rubbish and that I had only ever been to Wrexham once in my life."
Although the 2 November Newsnight programme did not name the peer - referring only to a senior Conservative from the Thatcher era - it quickly resulted in him being identified on internet blogs and social media sites.
The current affairs show later carried a full, on air apology for the broadcast.
An official report into the botched investigation by the BBC's Scotland director Ken MacQuarrie concluded Newsnight staff failed to complete "basic journalistic checks".
Mr MacQuarrie also found there was confusion about who had the ultimate responsibility for "final editorial sign-off", adding the programme's editorial management structure had been "seriously weakened" as a result of the editor having to step aside over the Jimmy Savile scandal, and the departure of the deputy editor.
Although legal advice was sought over the report, no right of reply was offered to the unnamed individual at the centre of the allegation.
The programme featured an interview with Steve Messham, an abuse victim who said a senior political figure of the time abused him. He later said he wrongly identified his abuser and apologised.
Ofcom investigations into programmes
UK Broadcasting watchdog Ofcom has launched investigations into ITV1's This Morning and BBC's Newsnight after complaints the shows breached "generally accepted standards".
The shows are also under scrutiny for "the application of standards to prevent unfair treatment to an individual, and unwarranted infringements of privacy".
The programmes involved are the 2 November Newsnight, and the 8 November This Morning where presenter Phillip Schofield confronted David Cameron with a list of alleged paedophiles.
ITV said earlier today that it has taken "appropriate disciplinary action" over the incident, which saw Mr Schofield roundly criticised for handing the Prime Minister a list of names during the live show which he said he had put together from internet rumours.