A judge ordered that Lincolnshire Health Authority pay eight-year-old Katie Phillips pounds 2,125,000 after a lengthy battle by her parents. Her twin sister, Becky, was killed by Allitt, who was working as a nurse at Grantham hospital.
The money will help to pay for special care for Katie, who was left partially blind and paralysed after Allitt smothered her in 1991.
Yesterday, after the settlement at Lincoln Crown Court, Katie's mother, Sue Phillips, 31, said: "The whole affair has taken a heavy toll on the family, but we now believe we can move on.
"We have had tremendous support from the public and now we can get on with our lives. I am still angry however that Allitt was allowed to continue what she was doing without being detected."
Allitt was 24 when, in the spring of 1991, she killed four children and injured another nine while working at Grantham. In 1993 Allitt - who was diagnosed as having Munchausen's Syndrome by Proxy - was given 13 life sentences and is currently held in Rampton high-security hospital in Nottinghamshire.
Last night a spokeswoman for Lincolnshire Health Authority, which employed Allitt, said the settlement, ordered by Mr Justice Jowitt, was the latest in a series of payments to Katie. "Over the years we have paid money into court," said the spokeswoman, Jane Crofts.
"We hope that this sees a conclusion on this claim. Katie's future care is now assured and there has been a lot of hard work by both sides. This has been reflected in the interim payments which have been made since 1993."
Paul Paxton, solicitor for the Phillips family, said: "There is never going to be enough money to compensate for the horror and events that went on." Under the deal, in which the authority was not asked to accept liability, the money will be administered by the Court of Protection and will be used to pay for treatment and equipment for the rest of Katie's life. Five months ago Katie's family rejected an offer of pounds 1.5m from the authority.
There have been a number of compensation payments to Allitt's victims and Lincolnshire Health Authority has paid out a total of around pounds 3m.
Two years ago Paul Lilley, now 19, made legal history when he was awarded damages after seeing Allitt kill a child. The teenager, from Newark, Nottinghamshire, received an undisclosed amount for post-traumatic stress disorder, in an out-of-court settlement of hisnegligence claim against Lincolnshire Health Authority.Reuse content