LONDON News International is expected to pay three million pounds ($4.7 million) to settle hacking claims by the family of murder victim Milly Dowler against Britain's now defunct News of the World newspaper, sources close to the issue told Reuters on Monday.
The settlement is likely to involve close to a two million pound payment to the schoolgirl's family and a donation of at least one million pounds to charity.
"News International confirms it is in advanced negotiations with the Dowler family regarding their compensation settlement," a spokeswoman for the company, parent company of the News of the World, said in a statement.
"No final agreement has yet been reached, but we hope to conclude the discussions as quickly as possible."
Mark Lewis, lawyer for the family, declined to comment.
If the settlement goes through, it would be the biggest payout made by News International, the British newspaper arm of News Corp, in the phone-hacking scandal.
Suggestions in July that a News of the World investigator listened in to, and deleted, messages left for the cellphone of the 13-year-old girl after she went missing, misleading police and her family, caused uproar in parliament, and outrage among the public.
It became the tipping point in the hacking scandal, which until then had focused mainly on the claims of politicians and celebrities.
Rupert Murdoch's News Corp announced soon afterwards it was to close down Britain's top-selling newspaper after 168 years.
The media mogul was also forced to drop a $12-billion plan to buy full control of highly profitable pay-TV operator BSkyB.
The phone hacking scandal has also led to Britain's most senior policeman and counter-terrorism officer quitting over the force's handling of the scandal, and shaken the political establishment, leading to a number of inquiries.
The depth of the furor over the Dowler affair led Murdoch to personally apologize to her parents during an arranged meeting in a London hotel, saying he had been appalled by the reports.
Dowler was abducted in 2002 and found murdered six months later. A former nightclub bouncer was jailed for life earlier this year for murdering her. ($1 = 0.639 British Pounds)
(Additional reporting by Georgina Prodhan)