Mr Farage has criticised MEPs for exploiting expenses
The leader of the UK Independence Party has accepted undisclosed libel damages from the Sunday Times over claims he used public funds to pay his son.
The High Court heard that the article compared MEP Nigel Farage's alleged employment of his son Sam to the case of disgraced Tory MP Derek Conway.
Mr Farage's solicitor said Times Newspapers had since accepted the claim was unfounded.
The newspaper has printed an apology and agreed to pay Mr Farage's costs.
The article, which appeared in February, said Mr Farage had employed his son as an assistant and paid him using taxpayers' money - even though Sam Farage was in full-time education.
The newspaper went on to say the situation mirrored that of Derek Conway, who was censured for paying his student son Freddie £40,000, despite the Commons authorities saying there was no record he had done any Parliamentary work.
Mr Farage's solicitor, Andrew Stephenson, said the article had suggested the south-east England MEP was a hypocrite, because while he had criticised other Euro-MPs for exploiting the allowances system it alleged he had been abusing the system himself.
Mr Stephenson told the High Court that as the newspaper had admitted its allegations were false, it was also wrong to make a comparison with Mr Conway.
Gillian Phillips, solicitor for Times Newspapers, offered its apologies and added it was pleased to set the record straight.
Mr Farage was not in court.