Lambeth Council has apologised and agreed to pay £5,000 in damages to the anti-abortion charity Life after evicting staff and volunteers from an event in the London borough last year.
Life had a stall at the Lambeth Country Show but was expelled before the second day of the event.
Edward Davie, a Labour councillor in Lambeth, claimed on Twitter that the charity had booked the stall using "inaccurate information" and "they were not on the approved list of exhibitors".
The council also tweeted that the stall was "booked using inaccurate information".
Life disputed the claims, which were repeated in the national press, and its lawyers claimed libel, breach of contract and unlawful interference with its right to freedom of expression.
The council offered £5,000 to settle the claim and agreed to post a clarification and apology on its Twitter feed, saying it had been incorrect to claim Life booked the stall using inaccurate information.
Stephen Sharpe, chief executive of Life, said in an open statement read by lawyers at the Royal Courts of Justice today that the sum was "relatively low" and the apology was "extremely narrow".
But he added: "It would have been disproportionate to proceed to litigate in such circumstances and we were mindful of the potential costs."
Sharpe said the opportunity to read the statement in court was "sufficient vindication".
Liz Parsons, head of advocacy at Life, said outside the court: "Lambeth’s agreement to settle this matter through a payment of damages is a victory for common sense and freedom of expression.
"In a climate where the pro-life voice is being shut down by local authorities across the country, we want to be clear that we are going nowhere."
A spokesman for the charity said it would apply to attend this year's country show.
In a statement, the council said: "Lambeth agreed to pay Life £5,000 in damages, publish an apology on Twitter and has undertaken not to publish, or cause to be published, the same or similar words to those originally tweeted by the council on July 22, 2018."
A council spokesman did not respond to a question about whether it would accept Life's application to attend this year's show.