Galloway offered £96,000 over claim he was in the pay of Saddam

George Galloway, the MP expelled from the Labour Party, for his vehement opposition to the Iraq war, has been offered £96,000 in libel damages over claims that he was in the pay of Saddam Hussein.

The Independent has learnt that the sum has been offered by the US-based Christian Science Monitor newspaper, which alleged the MP had received $10m (£5.94m) from the former Iraqi ruler. The newspaper's report was based on documentation discovered in Baghdad after the fall of Saddam which subsequently proved to be forged. Mr Galloway is pursuing a second libel action, against The Daily Telegraph, over claims, also based on documents found in the Iraqi capital, that he had been receiving £375,000 a year from Saddam.

The MP for Glasgow Kelvin has yet to accept The Christian Science Monitor offer. He is believed to be seeking documentation and further information from the Boston-based publication for possible use against The Daily Telegraph.

According to sources at The Christian Science Monitor, Mr Galloway is seeking to take action for the disclosure of documents from the freelance journalist who supplied the story, Philip Smucker, who was also working for The Daily Telegraph at the time.

The damages Mr Galloway is likely to obtain from the Monitor will be used in his case against the Telegraph. The MP has also raised £50,000 in donations for his legal action fighting fund. The MP is said to believe that in the current climate of public scepticism of the Government's case for war, including the discrediting of weapons dossiers, a jury will be suspicious of any documentation produced against him.

The Christian Science Monitor has already apologised to Mr Galloway for the allegations. Paul Van Slambrouck, the editor, said: "It is important to set the record straight. We are convinced the documents are bogus. We apologise to Mr Galloway and our readers."

The Telegraph has always maintained that its stories were based on research by its correspondent in Baghdad, David Blair, and not documents supplied by Mr Smucker. It is using a defence of "qualified privilege" and "honest comment".