A former Gurkha soldier has been awarded �40,000 in an an out-of-court settlement after a tribunal threw out his racial discrimination case against the Army..

The Cardiff tribunal ruled that it had no power to hear the claim of retired Lance Corporal Hari Thapa, 40, of Cwmbran, South Wales, because most of his service had been overseas.

He was seeking equal pay with British soldiers of the same rank. But further outstanding issues were settled on Friday.

His victory will not open the floodgates for other Gurkhas to claim compensation, which could have cost the UK Government up to �2bn in backpay and pensions.

Mr Thapa claims payments were discriminatory

The Ministry of Defence ruled that Mr Thapa is a special case - he was born in Britain, has a British passport and is married to a British nurse.

Mr Thapa brought a claim of race discrimination against the Army, alleging he was paid just 60% of a British soldier's earnings.

But his campaign took a blow last week when an employment tribunal in Cardiff ruled it could not consider his claim because most of his 15 years service was overseas.

Despite the ruling, the MoD agreed to pay British-born Mr Thapa �40,000 in damages - equivalent to his back pay.

The MoD also agreed that Mr Thapa's pension will be increased if any future legislation brings Gurkha pensions in line with British servicemen.

Mr Thapa said: "I am delighted that the Army has finally paid me simply what I had a right to receive in the first place.

"The Army discriminates against Gurkhas on racial grounds and they knew they would lose in the end.

"I have won my battle but it has taken the Army five years to accept that they have treated me wrongly.

"It has been a terrible strain for those five years but I knew it was worth fighting for. I am now happy that I can get on with my life."

Gurkhas are respected for their fighting prowess

Hampshire-born Mr Thapa is married to nurse Nicola, 41, and the couple have a three-year-old daughter Tamsin.

Mr Thapa now works as a security guard at Cardiff University.

An Army spokesman confirmed the out-of-court settlement would not open the floodgates for other Gurkhas to make similar claims.

Lt Col Barry Hawgood said: "The MoD noted the unique nature of Mr Thapa's claim because he is a British citizen.

The settlement was agreed with parties accepting there will be no further litigation in respect of this case.

The ruling brings to an end his campaign which was backed by the Commission for Racial Equality.