Police Commissioner Sir Paul Condon, who was not represented in court, denied liability, but had agreed to pay the damages, plus legal costs.
Roy Hanney, 33, left with an injury to his arm, had sued Scotland Yard for false imprisonment, assault and battery, and malicious prosecution by two officers from one of its territorial support group.
The High Court was told yesterday that it was only thanks to a woman who witnessed events and made an independent complaint about police behaviour that he was able to prove his innocence of the charges allegedly concocted by the two officers involved, PCs Tony Egan and Richard Ramsay.
After hearing the evidence of Nicola Todd, who said she was so "horrified" by the police action that she felt compelled to become involved, that the jury at Mr Hanney's trial, in south London, took the extraordinary step of sending a note to the judge and halted the trial.
The jury said they were "unanimously convinced of the innocence of the defendant".
Yesterday Mr Hanney's solicitor, Raju Bhatt, told Mr Justice Mitchell his client was one of many people helplessly caught in the midst of "violent and arbitrary charges by police officers with shields and batons drawn" during the anti-poll tax demonstration in March 1990.
The court was told Mr Hanney had endured "the humiliation and degradation of a violent assault and an arrest without good reason in full public view".
Mr Bhatt said PC Egan tackled Mr Hanney to the ground from behind, and then led him with an arm lock around the neck to a police van in which he was punched near the mouth, temple and eye.
Mr Hanney was in "excruciating pain", the court was told, while PC Egan held him in an arm lock at Rochester Row police station.
Mr Bhatt said after yesterday's hearing that, despite all the available evidence, the independent Police Complaints Authority had concluded that the "appropriate course of action" was for PC Egan to be "strictly admonished" for applying a wrist lock on Mr Hanney.
Mr Hanney, of Coldharbour Lane, Brixton, south London, said he was happy with the settlement, "but not terribly happy that I had to instigate these proceedings".
Latest figures show that for the year ending March 1994, the total amount of damages paid by the Metropolitan Police am-ounted to £1,761,000.
During that period, and not necessarily related to the claims against the police, 18 officers were dismissed and 16 required to resign.
Yesterday the PCA defended its action, saying that its task was to look at the allegations and decide using criminal standards of proof whether or not they were proved "beyond reasonable doubt".
The PCA has long argued that it should not have to consider cases using such a high standard of proof but should instead be allowed to consider cases of a scale of probability - as in civil cases.
"As a result of our finding, Mr Hanney was able to pursue a civil action against the police," said a spokesman.Reuse content