Hodge pays out to save her job

She acceded to demands made by a victim of child sex abuse she had wrongly labelled "an extremely disturbed person".

The decision by Mrs Hodge to make a personal payment to a children’s charity as well as make another apology to Demetrious Panton and pay his legal fees will damage the career prospects of the arch-Blairite minister.

Mr Panton’s row with the children’s minister began after she twice rebuffed approaches from him to discuss the sexual abuse he suffered while in the care of the London borough of Islington.

Mrs Hodge was leader of Islington Council in the late Eighties.

Her aides hoped her decision late last night to bow to Mr Panton’s demands would end the controversy that has dogged Mrs Hodge for a week.

Michael Foster, her parliamentary private secretary, made it plain last night that the minister would not resign over the row, which erupted following the BBC’s decision to read out a letter containing her remarks live on radio.

The whole financial package will be worth up to 20,000 to Mr Panton, who had threatened to press ahead with his libel suit if Mrs Hodge did not follow her written apology of last Friday and promise not to repeat her comments with a full blown admission that she was wrong.

The charity payment will go to NACRO - the National Association for the Care and Resettlement of Offenders.

The full statement from Mrs Hodge, issued late last night, said: "On Friday, Mr Panton’s solicitors requested the following three things.

"One, a public apology. Two, a donation to a charity of Mr Panton’s choice. Three, payment of Mr Panton’s legal costs.

"Solicitors for Mr Panton and myself have been in discussion today to work out the practical implications of those three requests.

"I can now confirm that we have agreed the following.

"One, a statement in court will be made shortly reiterating the apology made on 14 November. Two, I will make a donation of 10,000 to NACRO. Three, I have agreed to pay Mr Panton’s legal costs."

Mr Foster said that the amount of the legal costs to be paid by Mrs Hodge had not been fully agreed yet, but the total cost to the minister was certainly going to be more than 20,000.

In reply to questions about whether the minister would resist the inevitable calls for her resignation, Mr Foster added: "Her position hasn’t changed. She remains committed to the work that she is doing on the government’s agenda for children."

Asked whether she planned to go ahead with any public engagements she has this week, he said: "She will be carrying on with whatever arrangements she can, bearing in mind that government business over the next few days is quite heavy."

Mr Panton said in a statement: "I am delighted that Mrs Hodge has met all my requests."

He said that the minister had agreed to write to him again outlining why she had described him as "extremely disturbed". The letter will remain private, Mr Panton said, at the request of Mrs Hodge.

A statement of apology by the minister is to be read out at the High Court tomorrow.