Sir Olly Robbins has reached an out-of-court settlement with the government, after he was sacked as the top civil servant in the Foreign Office over the vetting of Lord Mandelson to be US ambassador.
Sir Olly was fired by then Prime Minister Sir Keir Starmer earlier this year, after it emerged Lord Mandelson had been granted clearance for the role despite concerns being raised by vetting officials.
The FDA union, which represented him in the legal action, said Sir Olly had been made a "scapegoat" to "mask the misjudgement" of Sir Keir.
How much Sir Olly received in the settlement has not been made public.
It came after he requested a judicial review over the decision to dismiss him.
A government spokesperson said Sir Olly "had a distinguished public service career over three decades".
A statement added: "The government has reached a settlement with Sir Oliver following his dismissal. We will not be commenting further on HR matters."
Lord Mandelson was announced as the UK's ambassador to the US in December 2024, before in-depth vetting had been carried out, and formally took up the role in February 2025 after being granted security clearance.
Just seven months later, he was sacked after further information emerged about his previous friendship with the late convicted sex offender Jeffrey Epstein.
Sir Olly was sacked in April, in the wake of a Guardian story that revealed the peer's security clearance had been granted despite vetting officials raising concerns, with the prime minister later saying he was "furious" he had not been informed at the time.
Sir Keir has previously said he sacked Sir Olly after not accepting his explanation for why clearance was granted, telling MPs in April: "I did ask him, and I did not accept his explanation. That is why I sacked him."
Sir Olly has since defended his role in the process, saying that the government's vetting processes must "remain absolutely confidential".
He previously told MPs that he had not seen the documentation from UK Security Vetting, the government's in-house vetting unit, containing their vetting assessment of Lord Mandelson.
He said that instead, he was given an oral briefing, during which he was told the vetting agency considered Mandelson to be a "borderline case", but that the Foreign Office may wish to grant clearance with "appropriate risk management".
Dave Penman, head of the FDA union, said: "This settlement may bring an end to the Judicial Review proceedings, but this whole unprecedented affair has damaged the bond of trust between civil servants and ministers, which is essential to the effective running of government.
"The scapegoating of Sir Oliver, to mask the misjudgement of the previous prime minister, marked one of the lowest points in the recent history of civil service-ministerial relations - which is quite the feat.
"We urge the government to clarify quickly the issues raised by this affair over ministerial involvement in the vetting process."
Sir Olly said: "I am grateful for all the support and good wishes from former colleagues, friends and strangers, which have helped me and my family during this difficult time.
"I want to thank the FDA for their assistance in reaching this settlement and I am looking forward to moving on to the next chapter of my life".
Sir Olly, who was appointed to the Foreign Office job in early 2025, has held a number of senior civil service roles and was previously the government's lead official during Brexit negotiations with the EU.