The Yorkshire councillor who tweeted a fake photo showing Jeremy Corbyn at the scene of the Liverpool terror attack has agreed to pay him "substantial" libel damages.

Cllr Paul Nickerson, who was suspended by his local Conservative group after his post on November 15, will also pay the Islington North MP's legal costs over the "false defamatory statement".

He has apologised for the doctored image, which showed Mr Corbyn laying a poppy wreath at the site of a burning taxi - as though he was honouring the bomber who was killed at the scene.

The driver of the taxi was injured after managing to get out of the vehicle during the attack outside the Liverpool Women’s Hospital.

Mr Corbyn instructed his solicitor, Martin Howe of Howe and Co, to bring legal proceedings for libel.

Commenting on the swift settlement of the legal case, he said: “The bomb attack on Liverpool Women’s Hospital on Remembrance Sunday was a horrific crime, which could have killed or maimed countless victims, including new mothers and their babies.

"Cllr Paul Nickerson’s photoshopped Twitter post about me failed to understand the seriousness of the threat and did a disservice to all those affected by the attack and their loved ones.

"So I welcome his decision to apologise for his defamatory post, to agree not to repeat the tweet which he has deleted and to pay substantial damages and legal costs.

"This substantial settlement will be used to support charities that are close to my heart, including one in Liverpool and one in my constituency."

Cllr Nickerson, who has signed a confidentiality agreement with Mr Corbyn over the amount paid, told the Gazette: "I've also sent a personal letter of apology to Jeremy Corbyn, and I'm deeply, deeply sorry for the tweet. It was offensive, and inappropriate, and I'm gravely ashamed of myself."

In a statement, he added: "The false photograph, captioned by the word 'unsurprisingly', gave the completely untrue impression that Jeremy Corbyn supports terrorist violence including suicide bombings, which without any hesitation I wholly accept he does not.

"Without reservation I fully withdraw any suggestion or inference that Jeremy Corbyn is a supporter of terrorist violence."