Katie Price's former manager accepted "substantial" undisclosed damages from the reality star today over a slanderous claim that she had an affair with Peter Andre.
Claire Powell, whose company Can Associates Limited still represents Andre, who was divorced from Price last October, sued over a comment made on The Graham Norton Show that month.
Her solicitor, Mike Brookes, said Price told Norton, fellow guests Jackie Collins and Jo Brand, and a studio audience of 600 that Ms Powell and Andre had had an affair, even though Ms Powell was engaged to Neville Hendricks, the father of her child.
Mr Brookes told Mr Justice Eady at London's High Court that the BBC "quite sensibly" edited the accusation from the broadcast but the story was quickly picked up by various tabloid newspapers.
"To be accused of infidelity, with one of her longstanding and high-profile clients, was obviously very damaging and distressing for Ms Powell - the most obvious reason being that the allegation was completely untrue."
He said Price, who was not in court, accepted that the allegation was completely untrue, apologised unreservedly and had agreed to pay substantial compensation and Ms Powell's legal fees.
Mr Brookes added: "Quite apart from the obvious attack on her professionalism, the claim was particularly upsetting and deeply embarrassing for Ms Powell because of her relationship with her fiance, and the father of her child, Mr Hendricks.
"The republication of the allegation in the national tabloid media was then a further blow, not only because it gave further vent to Ms Price's outrageous claim, but also because in her day-to-day role, Ms Powell is in constant contact with members of the tabloid press.
"Given all of the above, it would have come as no surprise at all to Ms Price that Ms Powell was determined to set the record straight, clear her name, and remove any suggestion of a stain on her character and professionalism, by immediately issuing proceedings against Ms Price, in which she also sought compensation for the substantial distress and embarrassment that Ms Price's comments had caused her."
He added: "So that there can be no further debate on the subject, she (Ms Price) is keen to emphasise that she accepts without question that the relationship between Ms Powell and Mr Andre has never been anything other than purely professional, and greatly regrets having embarrassed Ms Powell and having caused her distress."
Ms Price's solicitor, Keith Ashby, said: "She greatly regrets what has happened, and joins in the making of this statement in order to assist in setting the record straight."
Outside court, Ms Powell said: "I'm just glad it's been sorted. I didn't really want to be in court but if something bad is said which is going to trash your reputation, you have to clear your name."