Volkswagen has agreed to a $1 billion settlement to fix or buy back another 80,000 polluting diesel vehicles sold in the US as the German car maker took new steps to put its emissions cheating scandal behind it. 

The settlement deal covered luxury VW, Audi and Porsche vehicles with 3.0-litre engines.

It means that Volkswagen has now agreed to spend as much as $17.5 billion in the US to resolve claims from owners as well as federal and state regulators over polluting diesel vehicles. 

The world's second-biggest car maker still faces the possibility of spending billions of dollars more to resolve a US Justice Department criminal investigation and federal and state environmental claims, as well as oversight by a federal monitor. 

The new agreement settles part of litigation brought against VW by federal and California regulators.

It "is another important step forward in our efforts to make things right for our customers," Hinrich Woebcken, president and CEO of Volkswagen Group of America, said. 

Volkswagen also agreed to boost electric vehicle efforts in California and faces additional costs as it works to finalise an agreement to provide what Breyer called "substantial compensation" to the owners of the 3.0-litre vehicles. 

A US judge in October approved VW's earlier settlement worth about $15 billion with regulators and the US owners of 475,000 polluting diesel vehicles with smaller 2.0-litre engines, including an offer to buy back all of the cars. 

Meanwhile, German engineering company Robert Bosch, which produced the software for the VW diesels, has also agreed in principle to settle civil allegations made by US diesel vehicle owners. 

Bosch confirmed it had reached the agreement, but said it was not accepting liability nor admitting to the allegations made in the lawsuit by owners who said the company was a knowing and active participant in VW's emissions cheating scheme. 

Reuters reported earlier this week that the settlement was expected to be worth more than $300m. 

VW admitted in September 2015 to installing secret software known as "defeat devices" in 475,000 US 2.0-litre diesel cars to cheat exhaust emissions tests and make them appear cleaner in testing than they really were. 

In reality, the vehicles emitted up to 40 times the legally allowable pollution levels. 

The company later admitted to also using "defeat devices" in the 3.0-litre vehicles. 

The 80,000 3.0-litre US vehicles had an undeclared auxiliary emissions system that allowed the vehicles to emit up to nine times allowable limits. 

The scandal hurt VW's global business and reputation and led to its CEO leaving the company.