The former head of the British Army, 93, was falsely accused of being a paedophile after Scotland Yard swooped on his home in connection with the controversial Operation Midland child sex abuse probe.
He was questioned in April 2015 before being told in January last year that he faced no further action as part of the Met’s bungled probe into a supposed VIP paedophile ring.
Lord Bramall, who was never arrested, had always categorically denied the allegations.
Departing Met Police chief Bernard Hogan-Howe visited him at his home to apologise to him in October last year.
The Daily Mail reported that Met Police has negotiated “hard” over compensation and that it would have to come out of its policing budget.
A former senior detective told the newspaper: “But a former senior detective said last night: ‘This is a ludicrous argument, given how much money was wasted on Operation Midland in the first place. If the Met cared so much about budgets, why did it drag out the inquiry for so long?”
Sources are said to have told the Daily Mail that the force is “very keen” to settle legal action threatened by Lord Bramall and that a six-figure pay out of up to £100,000 was close to being agreed.
A Met Police spokesman said: “The Metropolitan Police Service is keen to resolve this matter as quickly and fairly as possible, balancing the fact any settlement will be made from public funds.”