Diageo Ltd has settled a legal battle with over 100 Thalidomide victims in Australia and New Zealand with an AUD$89m (£49.5m) payout.

In 1997 Diageo acquired Distillers Company, the Australian and New Zealand distributor of Thalidomide.

Class action had been a long battle against Diageo, the victims' lawyer Peter Gordon confirmed.

In addition to the payout, which will now be subject to court approval, Diageo will also pay AU$6.5m in legal costs. Gordon said the case against German Thalidomide producer Grunenthal will now be discontinued.

Diageo spokesman Ian Wright said: "We are very pleased that, working closely with Gordon Legal, we have been able to resolve these claims through an out of court process.

"Diageo has always endeavoured to act responsibly and empathetically with respect to people injured by thalidomide, as evidenced by our continuing relationship with the UK Thalidomide Trust and the Australian Trust settlements of recent years.

"We believe that the settlement reached today is both fair and equitable to all involved in this very sensitive and difficult situation. I am pleased that Diageo has again acted responsibly for people who have suffered as a result of thalidomide."

Grunenthal removed the drug after babies were born with birth defects (Reuters)

Thalidomide was given to pregnant women in the 1950s and 60s as a treatment for morning sickness but it caused debilitating birth defects and was pulled from the market in 1961.

People from across the world who are living with the side effects have been embroiled in legal battles with Thalidomide distributors and Grunenthal.

In 2010, the British government issued an apology to those affected by Thalidomide and paid £20m to its victims.

Last year, Diageo settled a case with Australian victim Lynette Rowe, who was born without arms and legs, but the sum was not disclosed.

Earlier this year, a Spanish court also ordered Grunenthal to pay compensation to 22 Spaniards born with disabilities as a result of the drug. Grunenthal said it was disappointed by the decision and said it would now assess the judgement in "great detail" to "decide on the appropriate course of action".

Diageo said the settlement was \"fair and equitable\" (Reuters)

The company apologised to its victims for the first time in September last year, but has never offered compensation. It says the drug was consistent with "prevailing standards for the development and testing in the pharmaceutical industry at that time".

Michael Magazanik, another lawyer acting on behalf of the Australian victims, said Grunenthal's conduct regarding Thalidomide has been appalling.

"Every single Australian thalidomider was injured by a drug made by Grunenthal in Germany. Despite that, Grunenthal still will not pay a cent to its Australian and New Zealand victims.

"Fifty years on, Grunenthal will still not 'fess up to its shameful behaviour in relation to that drug.

"We think time is running out on Grunenthal and before too long its sorry secrets and its embarrassing and shameful conduct in relation to the drug will be exposed."