Lawyers for Bogdan Maris, identified under the pseudonym Alin Turcu, said News Group Newspapers agreed to make a "modest" donation to a charity of Maris's choice as well as to his legal costs.

In November 2002 the News of the World, under the headline "Posh Kidnap," reported that it had foiled a plot by an international gang to kidnap Beckham's wife and their two infant sons.

The biggest-selling Sunday tabloid said they intended to kill Beckham's wife if her husband did not meet a five million pound ransom demand. The report was followed up by another article in the daily The Sun.

Maris, 25, who arrived in Britain in 1999, was identified in both articles by photographs accompanied by his pseudonym Alin Turcu. He was said to have been involved in the plot as a surveillance expert.

He was arrested the following day and held on remand for eight months, but returned to Romania after a June 2003 trial collapsed as it emerged that a key witness was paid for feeding news to News of the World.

On Wednesday Ben Beaby, lawyer for News Group, insisted that "there was a plot to kidnap Victoria Beckham," but admitted: "The defendant now accepts that this plot did not include the claimant."

Maris welcomed the admission. "I am just very relieved that after almost five years the News of the World has finally accepted that I was not part of any plot to kidnap Victoria Beckham," he said.

The settlement also cancels an order made in the High Court for Maris to pay the newspaper's 400,000 pounds in legal costs. Maris also received a public apology in the Court of Appeal.

Britain's domestic Press Association news agency said it understood that the the appeal was based on fresh evidence from Florim Gashi which emerged after the High Court libel trial.

Gashi was the main source for the story, but was not called by the newspaper to give evidence at the trial.