Margaret Hodge last night sought to draw a line under her dispute with a victim of the Islington child abuse scandal by announcing she will make a public apology to the man she described as "extremely disturbed".

The children's minister, who was set to face a libel action over her remarks, will apologise in the high court and has agreed to pay Demetrious Panton's legal costs.

She will also donate £10,000 to the charity Nacro.

The minister hopes the deal, agreed between her lawyers and Panton's representatives, will end the dispute which threatened her ministerial career.

But Panton, who was a victim of the child abuse scandal in Islington care homes, said Hodge should still resign.