Kidman signed a deal to promote fashion house Chanel in 2003

The Oscar-winning star, 40, will receive undisclosed damages over allegations that she used a non-Chanel scent during a recent visit to London.

Kidman's solicitor John Kelly said she had suffered considerable embarrassment and distress over the story.

The star was not at London's High Court for the settlement of her libel action.

Mr Kelly said Kidman intended to donate her "substantial" damages to Unifem, the United Nations Development Fund for Women.

Premiere

In an item published in its Spy gossip column last month, the Telegraph alleged Kidman had upset Chanel by using Jo Malone perfume while promoting her latest film in London.

She was attending the premiere of The Golden Compass, a fantasy production based on the fiction of British author Philip Pullman.

Mr Kelly said the story wrongly suggested Kidman had acted in an unprofessional and disloyal manner and had flouted her contractual obligations.