Sean Dempsey/PA News Int

The former publisher of the News of the World has confirmed it is in 'advanced negotiations' with the family of Milly Dowler

Credit: Sean Dempsey/PA

News International has confirmed it is in "advanced negotiations" with the family of Milly Dowler on a compensation settlement, after reports the figure has reached more than £2 million.

The company has not released any further details on specific offers, but News International title the Times today reported that the family of the murdered schoolgirl is "close to agreeing a record £3 million settlement".

This is said to include a £2 million payout to Milly's parents and a £1 million charity donation from the boss of parent-company News Corporation, Rupert Murdoch.

The Times reports that if the settlement reaches such figures it will be the highest compensation payment ever made by a newspaper.

The settlement is in relation to the alleged hacking of Milly Dowler's phone by the News of the World while she was missing in 2002.

Following reports of the allegations, originally revealed by the Guardian, the family announced it was to sue the publisher of the News of the World.

Today the company confirmed it was in advanced negotiations regarding the family's compensation settlement.

"No final agreement has yet been reached but we hope to conclude the discussions as quickly as possible".

Lawyer for the Dowler family Mark Lewis declined to comment further on the figures when reported yesterday.

The Hacked Off campaign has released a statement to say it welcomes the reported settlement, but that it would have been more welcome "had it not come almost a decade after the original incident".

The Guardian revealed last week that it is currently facing a legal challenge from the Metropolitan police in relation to its reports on phone hacking stories such as the Milly Dowler allegations.

The Metropolitan police force is due to apply for a court order on Friday (23 September) to force the newspaper to hand over documents revealing source details.

In a statement issued yesterday the Met sought to clarify its decision to apply for the production order against the title and one of its reporters, under the Police and Criminal Evidence Act, in response to wide criticism in the press.

Its application also refers to the Official Secrets Act, in relation to "possible offences" which may have been committed by an officer from Operation Weeting, the team investigating phone hacking allegations.

The officer in question was arrested on 18 August on suspicion of misconduct in a public office, relating to unauthorised disclosure of information. He is currently on bail.

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