Murdoch offers Dowler family £3m to draw line under hacking

(PA)

The family of the murdered schoolgirl Milly Dowler has been offered nearly £3m by Rupert Murdoch's News International (NI) as the company tries to draw a line under the single most damaging incident in the phone-hacking scandal.

The huge payout, which i understands is to be divided between Milly's family and charities designated by them, comes after Mr Murdoch held his head in his hands in a meeting with the teenager's parents this summer and repeatedly apologised for the interception of her voicemails by his News of the World.

The revelation in July that the private investigator Glenn Mulcaire accessed Milly's mobile phone on behalf of NOTW after her disappearance in March 2002 – and that messages were deleted from her phone, giving her family false hope that she was still alive – was a tipping point in the hacking saga, unleashing a wave of public anger which ultimately forced the closure of the 168-year-old tabloid.

The main principles of the settlement between NI and the Dowler family have been agreed and the package is expected to be finalised in the coming days. It is likely that Mr Murdoch personally approved the payment to the Dowlers.

Following a memorial service for their daughter in 2002, Sally and Bob Dowler set up Milly's Fund, a charity that aimed to promote public safety and was later wound into the Suzy Lamplugh Trust.

Mark Lewis, the lawyer representing the Dowlers, was unavailable for comment last night.

The settlement dwarfs other payments made so far in the phone-hacking scandal, including the £100,000 paid to the actress Sienna Miller. NI also paid £700,000 to the footballers' union boss Gordon Taylor in 2008 and £1m to the publicist Max Clifford last year.

The size of the settlement with the Dowlers, who this summer saw former bouncer Levi Bellfield convicted of Milly's murder, means that the total cost to NI of paying damages to victims is almost certain to exceed significantly the £20m set aside by the company to meet the burgeoning number of High Court lawsuits against it.

An NI spokeswoman said: "News International confirms it is in advanced negotiations with the Dowler family regarding their compensation settlement. No final agreement has yet been reached, but we hope to conclude the discussions as quickly as possible."