Jailed peer Jeffrey Archer has repaid the �500,000 he was awarded in 1987 following a libel action against the Daily Star.

Express Newspapers said the former Conservative deputy chairman has paid back the sum, plus the majority of the substantial legal recovery costs - a total believed to be �1.8m.

Lord Archer was awarded the money when he sued the newspaper for libel for claiming he had paid �2,000 to prostitute Monica Coghlan.

But he was jailed in July 2001 for four years after a jury ruled that he had lied in the trial.

Archer denied sleeping with Monica Coghlan

That prompted the newspaper to begin legal proceedings to recover the money.

A statement issued by Express Newspapers on Monday confirmed Lord Archer had settled his debt with the Daily Star.

It said: "Archer, now in Lincoln Jail serving a four-year sentence for perjury, has repaid the newspaper the original sum, plus the majority of the substantial legal recovery costs.

"The 1987 judgment against the Daily Star, and its then editor Lloyd Turner, has been set aside by the courts as it was obtained by fraud."

Faked diary

Mr Turner was sacked after the trial, and later died.

BBC media correspondent Nick Higham said the total paid is believed to be about �1.8m, about �1m less than Express originally hoped to recover.

The payment to Express Newspapers is an out of court settlement which follows a long round of legal discussions with representatives of the multi-millionaire author.

It comes on the eve of what would have been the latest High Court hearing.

Lady Archer has stood by her husband

Lady Archer has not commented on the settlement but said she may make a statement on Wednesday.

Last year, the Old Bailey was told Lord Archer used a faked diary to win the case against the Daily Star.

He asked his friend Ted Francis to provide an alibi to back up his case, although it was never needed in court.

Last week, Lord Archer was moved from his open prison after breaking its rules by attending a lunch party during a home visit.

He was taken to the closed Lincoln Prison from the North Sea Camp prison.

A senior prison warder resigned after it emerged he broke rules by having lunch with Lord Archer during the peer's day release from jail.