The Sun will pay damages after it printed stolen topless pictures of a woman who made headlines when she had a lottery claim rejected.
Susanne Hinte, dubbed "Lotto Gran" by tabloids, alleged she ruined a £33m winning lottery ticket in the wash.
The newspaper later published photos of her sold to them for £750.
After a High Court breach of privacy battle it will now pay damages to the family of Ms Hinte, who was from Worcester and died in August.
The Sun's publishers, News Group Newspapers (NGN), has not admitted liability and said it did not know the photographs were stolen.
Ms Hinte's daughter Natasha Douglas pursued a claim against the company for the misuse of private information.
She also sued NGN for breach of confidence, copyright and data protection law, as well as for the distress the article caused to her mother.
Julie Howard, received a suspended six-week jail term in January 2017 for stealing the photographs from Ms Hinte's phone and selling them.
The public reading of the settlement at the High Court on Thursday was the first of its kind in a privacy case for a deceased person.
Mr Nick McAleenan, lawyer for the Hinte family, said the Sun's article was "distasteful and unnecessary" and a "serious intrusion and misuse of Susanne's private information".
Mrs Douglas said the newspaper "stole [her] mother's dignity with their sheer callousness".
"They were incredibly cruel to my mother, but I'm glad to see her vindicated", she added.
The news comes as recent revenge porn police figures revealed one in three allegations are withdrawn by the complainant.