By Dominic Casciani
BBC News community affairs
Britain's top Jewish body has apologised for branding a Muslim charity a "terrorist organisation".
Interpal: Planned to sue for libel
In an out-of-court settlement, the Board of Deputies of British Jews said it should not have described Interpal in these terms.
London-based Interpal, which raises millions for Palestinian causes, had launched a libel action against the Board, due in the High Court next year.
The board has now published a retraction and apology on its website.
In the statement, the Board said it had reached a settlement with Interpal in relation to a September 2003 article on its website which referred to "terrorist organisations such as Hamas and Interpal".
"We would like to make it clear that we should not have described Interpal in this way and we regret the upset and distress our item caused," said the statement.
Interpal is one of the largest Muslim-led charities in Europe and says its funds humanitarian, educational and medical projects in the Palestinian territories.
The charity, which spends approximately £5m a year, insists it keeps exhaustive records and audit trails of how its Palestinian partners spend money.
Claims from Washington
The row with the Board of Deputies began after the US Treasury Department accused Interpal of being part of the European "funding network" for Hamas, the largest militant Islamist organisation in the Palestinian territories involved in suicide bombings.
Officials claimed Interpal was a conduit through which other organisations could fund Hamas' activities.
Washington said it would freeze any assets of the charity in the US and banned US nationals from having any dealings with the organisation.
The Charity Commission, the UK watchdog, froze the charity's accounts and launched an investigation. It later cleared Interpal, saying Washington had not been able to substantiate the claim.
The US Treasury has however kept Interpal on its list of suspected organisations, a situation that continues to infuriate many British Muslims.
Ibrahim Hewitt, chairman of Interpal, told the BBC that he welcomed the Board of Deputies' apology. The precise terms of the settlement would remain confidential, he said.
"We are extremely pleased to have won such an important and long-running battle," said Mr Hewitt.
"All that we ever wanted was an apology to clear the charity's name.
"We are glad that we can now put the Board of Deputies' attack upon the charity behind us and can focus our energies entirely upon Interpal's essential relief work."
Mr Hewitt said Interpal was still trying to meet with US Treasury officials in an effort to have the charity's name taken off the list of suspected organisations.
"We have been trying to negotiate with them - we've always said they are welcome to come and check our systems."
A spokesman for the Board of Deputies told the BBC there would be no further comment on the issue.