Private investigator Glenn Mulcaire has won his High Court action against News Group Newspapers over his legal fees.
Mulcaire, who was jailed for six months in 2007 for intercepting messages on royal aides' phones, had sued News International subsidiary NGN for breach of contract.
He said he could not fund his legal defence or pay costs or damages incurred in the civil hacking litigation - due to start in February - and asked for a declaration that NGN had no right to terminate an alleged June 2010 indemnity.
NGN argued that Mulcaire's demand for £750,000 in return for his co-operation over the proceedings negated the offer.
Mulcaire was not in court in London for the ruling by the Chancellor of the High Court, Sir Andrew Morritt.
The judge said a valid contract of indemnity was concluded between Mulcaire and NGN on the terms of the indemnity letter of June 28 2010, by which it agreed to indemnify him from the costs and damages arising from voicemail litigation to which they were joint defendants, and NGN had no right to end the contract, which continued to exist.
Mulcaire's counsel, Ben Williams, had told the court that NGN did pay Mulcaire's legal costs until July 19 when Rupert and James Murdoch were questioned by a Commons select committee and challenged about the payment.
"Glenn Mulcaire's case is that the defendant did agree to pay his costs, the agreement is enforceable and the defendant did not have the right to terminate it."
He said that, despite the rhetoric employed by MPs at the committee, there was nothing "exotic, unusual or improper" in the arrangement contended for by Mulcaire.
"Where an employer and an employee have each acted unlawfully and the employer is liable to pay damages and costs resulting from one or both, it is not remarkable to find the employer paying an employee's legal costs and involving itself closely in his defence of civil proceedings."
Equally, where there was joint liability and one party had substantial means while the other did not, it was not surprising for them to reach an agreement between themselves as to how it would be funded.
He denied that the request for additional compensation constituted a rejection of the offer of indemnity.