Frank Walters, 52, and his wife Sandra, 53, who said they they were forced out of Clarencefield in Dumfries last year because of anti-English taunts, received an undisclosed sum.

Mrs Walters said afterwards the Scottish people were "the best in the world" and added that her husband wanted to return to Scotland to enjoy their retirement.

The settlement at Dumfries Sheriff Court, admitted no liability on the part of the defenders, publican Colin Pearson and his post mistress wife Jacqueline.

'Economic factors'

The Pearsons' solicitor, John Lawson, said afterwards both sides had settled out of court "on the basis of economic factors rather than matters of principle or indeed nationality".

He continued: "it should also be borne in mind that the pursuers in this case were subject to heavy financial backing by the Commission for Racial Equality.

"Mr and Mrs Pearson were funding the matter themselves out of their own pocket and that has been a prime consideration."

Mr Lawson added that Mr Pearson's father was English, from Birmingham, and that he had "not a molecule of anti-English sentiment in his body".

Mr and Mrs Walters, who now live in Cumbria, had said they moved to Scotland from Liverpool 12 years ago, but faced opposition from some local people because of their nationality.

On one occasion, they said, the pub juke box blared out the song Flower of Scotland 16 times while Mr Walters was there.

Post office

They had planned to sue Mr and Mrs Pearson for a total of �20,000, alleging they were barred them from the Farmers Arms pub and adjoining post office.

Their action alleged unlawful discrimination under the Race Relations Act and was backed by the Commission for Racial Equality.

Mr and Mrs Walters later said they were extremely happy with the settlement and insisted the issue was one of nationality.

"It was just a small few who made our lives a misery and it mustn't happen to anybody else, that's why this case was brought," said Mrs Walters.

"Scottish people are the best people in the world, we have lived here a long time and they are wonderful. It is just a small few."

She added she and her husband, who has a heart condition and is confined to a wheelchair, wanted to move back to Scotland to enjoy their retirement.