Costs which could amount to another pounds 50,000 will also be paid by the Metropolitan Police under an out-of-court settlement.
Peter Stephenson, of Lambeth, south London, was acquitted at Snaresbrook Crown Court in December 1988 of causing grievous bodily harm, possessing an offensive weapon and going equipped for criminal damage.
After yesterday's settlement at Croydon County Court, Mr Stephenson, 28, said the money was 'only a sweetener'. He added: 'I haven't got proper justice. I feel the people who offended against me should be sent to prison.'
Despite agreeing a statement settling the claim, the Metropolitan Police continues to deny allegations against two officers based at Dalston police station in north-east London in 1988.
During Mr Stephenson's trial the prosecution had depended on evidence from two constables, Richard Tully and Christopher McAloon, that Mr Stephenson tried to hit PC Tully with a length of timber embedded with nails, kicked and punched officers, and was later found to be carrying a four-inch knife.
Mr Stephenson, who was helping a former girlfriend squatting in flats at Stamford Hill, north London, alleged the officers planted the weapons on him.
According to the agreed statement, he was allegedly kicked and punched by PC Tully, and punched again on the way to the police station. A police doctor who examined him found bruising to his face and pain and tenderness to the back of his head and rib cage.
Mr Stephenson said he was bitter that he had been 'put through a year of misery' while police appeared to be 'turning a blind eye' to allegations such as his own, and were 'encouraging thuggishness' among their officers.
Last year, the Metropolitan Police paid out more than pounds 1.5m. In 138 out of 237 cases, payments were made in out-of-court settlements totalling pounds 1.3m. The police won 16 of the contested cases.Reuse content