This emerged after Clare Latimer abandoned the libel battle she began when Scallywag, along with New Statesman and Society, highlighted gossip linking her name to that of the Prime Minister.
In a deal hailed as a victory by Scallywag, Ms Latimer withdrew the case, without winning an apology, when the magazine undertook not to repeat the allegations.
Lawyers for John Major said that a similar undertaking would be enough to persuade him to settle. 'That would dispose of it,' David Hooper, the Prime Minister's solicitor, said.
Any such settlement would undoubtedly be portrayed by Scallywag as a capitulation by Mr Major. However, yesterday, sources close to the magazine said it would take the case to court unless Mr Major went further and agreed to pay its costs.
This leaves Mr Major in a precarious position. Even if he were to win a court case, Scallywag does not have the money to pay any damages.
Legal sources said that the same consideration weighed on Ms Latimer when she agreed to settle. She will not receive damages and will have to pay her own legal costs, possibly running to several thousands of pounds.
In a statement, Scallywag's lawyers said that their clients were 'very happy with what they see as a massive climbdown by Ms Latimer'.
'They do not admit that what they published was defamatory,' the statement continued. 'Ms Latimer originally demanded substantial damages, her large costs and a grovelling apology. She has got none of these.'
Sources close to Ms Latimer disputed the view that Scallywag had won. They said that until recently the magazine had refused to give any sort of undertaking. They also pointed out that Ms Latimer and Mr Major had received pounds 30,000 from Scallwag's former printers and distributors.
In their statement, Scallywag's lawyers conceded that this deal had 'crippled' the magazine.
Last week, New Statesman and Society paid Mr Major and Ms Latimer pounds 1,001 each to settle the case they had brought against the left-wing weekly. The magazine's printers, BPCC, and its distributors, Comag, and the newsagents, John Menzies, had reached an out of court settlement worth about pounds 150,000.
Following the settlement with New Society, the Prime Minister declared that the affair had been brought to a close. But yesterday's deal, and Scallywag's insistence that it will fight on, show that he was premature with his announcement.
Asil Nadir, the fugitive tycoon, is to write a column for Scallywag from next month, the magazine said.Reuse content