The iPod has eclipsed other portable music players

The two companies traded lawsuits after Creative accused Apple of infringing its patents in its iPod music player.

Creative launched its own digital music players in 2000 but they have been largely eclipsed by Apple's iPod.

Regulators launched a probe into the dispute, revolving around a navigation menu designed by Creative, in June.

'Amicable settlement'

Creative called for iPods to be withdrawn from sale in the US, claiming their software infringed patents on technology used to organise music on its Nomad and Zen media players.

As part of the settlement, Apple will pay Creative $100m to license a software patent for use in all its products.

This settlement resolves all of our differences with Creative, including the five lawsuits currently pending between the companies Steve Jobs, Apple chief executive

Creative will also be able to supply accessories for the iPod under Apple's "Made for iPod program".

"This settlement resolves all of our differences with Creative, including the five lawsuits currently pending between the companies and removes the uncertainty and distraction of prolonged litigation," said Apple's chief executive Steve Jobs.

Creative described the settlement as "amicable" and said it opened up "significant new opportunities" for the business.

The US International Trade Commission was conducting an inquiry into the dispute but this is now expected to end.