George Yates claimed that he developed soft-tissue sarcoma through contact with the pesticides, which contained Pentachlorophenol (PCP) and the attendant impurities, dioxins, used in timber treatment.
His case is the first to be settled anywhere and could pave the way for other claims in Britain. It could also open the way for renewed actions by people exposed to Agent Orange, the defoliant used by the United States during the Vietnam war.
Between 1978 and 1988, Mr Yates worked for Rentokil, one of Britain's leading wood and dry rot treatment firms, using Lindane and PCPs in sprays.
Mr Yates, who is in his forties, from Rhyl, Clwyd, estimates that over the years he used about 35,000 litres of pesticide and was not given the necessary protective clothing. He was only supplied with overalls, through which the chemicals could soak, and a face mask, though he was eventually provided with a helmet with an air supply.
Several years ago he developed the cancerous growth in his abdomen and underwent extensive surgery. His condition is stable, but he is disabled and unable to work. Leading doctors, including Lennart Hardell, a Swedish cancer expert, have backed his claims that the illness was caused by the dioxin. His solicitor, Alan Care, of Leigh Day and Co, said that the settlement was 'a watershed in dioxin-related claims'.
Dioxins are present in a wide range of commonly-used products, including petrol and waste from incinerators.
American lawyers were also keenly awaiting the outcome of the case. Stuart Callwell, a leading West Virginia-based lawyer, said: 'It's very significant. There is a substantial body of medical literature that reports critical observations of a variety of illness in populations exposed to dioxins, including cancer.'
Mr Callwell represented employees manufacturing an ingredient used in Agent Orange, who said they had developed illnesses as a result. Although the jury found that the injuries were caused by dioxins, it ruled that the company had not been at fault.
Last year, President Bush signed a Bill clearing the way for Vietnam war veterans who developed cancer after being exposed to Agent Orange, to be paid disability benefits.
However, some of the veterans are still hoping to take legal action. Their claims could be affected by the outcome of the British case.
Yesterday, Rentokil strongly rejected Mr Yates's claims that his cancer was caused by his contact with the chemicals and said that the settlement had been made by its insurers against their wishes.
Charles Grimaldi, of Rentokil, said: 'We are quite clear that there is no connection between his exposure to chemicals while working for us and his contracting a rare illness.'
He said that the insurance company had taken the decision since the irrecoverable losses even if they won a court case would be at least pounds 200,000, on top of costs already incurred.