An Algerian pilot falsely accused by America of training the 11 September hijackers is expected to win an estimated five-figure damages payout from The Mail on Sunday in a settlement to be agreed in the High Court today.
Lotfi Raissi, 29, was arrested within days of the terrorist attacks on the World Trade Centre and the Pentagon.
He spent five months in Belmarsh prison in south east London and was told it was likely he would be charged with conspiracy to murder and could face the death penalty in the US.
On 30 September 2001, The Mail on Sunday published an article accusing Mr Raissi of stealing the identity of a 74-year-old grandmother who had died four years earlier. The story said he had used her social security number to help set up a new identity in America.
Since his release, Mr Raissi, who lives in London with his wife - a French Catholic - has been unable to continue his career as a pilot.
Associated Newspapers, the publisher of The Mail on Sunday, is understood to have agreed to pay Mr Raissi substantial damages and legal costs, as well as offer an apology. A statement is expected to be read out in court today.
Mr Raissi has already launched legal action against the FBI and the Department of Justice for £13m for false imprisonment and malicious prosecution. He is expected to make similar claims against the Crown Prosecution Service and the police in this country.
Mr Raissi, the first person to be arrested after the 11 September attacks, said he was assaulted and verbally abused while in prison. He has always argued that the US planned to make him a scapegoat because he was a Muslim pilot.
Since his release, he has been treated by a psychiatrist. "I can't fly aeroplanes anymore. I've been blacklisted from all airlines," he told the BBC. Had an apology over his treatment been given, he would not be resorting to legal action, he said.