The government has settled with former civil servant Sir Philip Rutnam over his claim for unfair dismissal.
The ex-Home Office official quit last February, amid bullying claims against Home Secretary Priti Patel, which she denies.
He said he had been the victim of a “vicious and orchestrated” briefing campaign after trying to get Ms Patel to change her behaviour.
The claims had been due to be heard at an employment tribunal this September.
The Home Office said the government and Sir Philip had “jointly concluded that it is in both parties’ best interests to reach a settlement at this stage”.
“The government does not accept liability in this matter and it was right that the government defended the case,” a spokesperson said.
The BBC understands the former official is receiving a substantial settlement.