In a complex and confidential settlement, both Bryce Taylor, the owner of the gym, and the Mirror Group, apologised and promised that the pictures would never be used again.
An undisclosed amount of money for charity and Mr Taylor's costs are to be paid out of a six-figure sum paid by the Mirror Group of newspapers and others around the world for the pictures and frozen by the court. The Princess will not have to pay any of her own costs.
To support her claim that publication was a breach of her contract with the gym, the Princess had come within less than a week of becoming the first member of the Royal Family to give evidence in court this century to support her claim that the publication was a breach of her contract with the gym. Thehearing had been due to start on Monday.
However, while palace aides, who had united behind the Princess's action, hope that her willingness to go through the ordeal of cross-examination in the witness box will temper press coverage in future, it seems equally likely that newspapers will draw the conclusion that the Royal Family will always back down at the last minute.
In recent years, the Prince of Wales has privately advocated taking libel actions if necessary to correct mistakes.
The Princess's solicitors, Mishcon de Reya, issued the settlement terms in a statement in the early hours yesterday. That was apparently timed for the convenience of the royal visitors in Japan.
All parties have agreed not to comment on the sum paid for the pictures, which were published in the Daily Mirror and the Sunday Mirror, how it will be split, or what legal costs have been run up.
Max Clifford, who acted as Mr Taylor's publicity agent for a time, claimed yesterday that his former client would receive some of the money for the photographs, but Martin Cruddace, the Mirror Group's solicitor, dismissed the suggestion out of hand.
Mr Taylor, who is now living in New Zealand, received legal aid in the case. If he had won, and the money been unfrozen, he would have had to repay the Legal Aid Board, and the same condition would have applied if he had been awarded any money as part ofyesterday's out of court settlement.
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