Justin Timberlake (search) on Wednesday accepted an apology and damages from a tabloid newspaper that falsely accused him of cheating on girlfriend Cameron Diaz (search) with a British model.

The American singer had filed a libel suit at London's High Court over a July 2004 claim in the News of the World that he had a fling with model Lucy Clarkson (search).

Benjamin Beabey, lawyer for the tabloid's publisher, News Group Newspapers Ltd., said Wednesday that The News of the World apologized "for the distress and embarrassment caused by this article. It entirely accepts that the allegations are without foundation."

Clarkson's lawyer, David Griffiths, said the model acknowledged that the story was "an entire fabrication on her part."

Timberlake's lawyer, Simon Smith, said the allegations had caused damage to the performer's "personal and professional reputations."

He said the publisher had agreed to pay "a substantial undisclosed sum as damages." Clarkson had agreed to pay "a sum equal to that which she agreed to receive from the News of the World" for her story.

The defendants also had agreed to pay Timberlake's legal costs, Smith said.

"In the light of these developments, Mr. Timberlake has decided not to pursue these proceedings and considers that his reputation has been fully vindicated," Smith said.

Timberlake's publicist, Ken Sunshine, said the singer planned to donate the damages money to charity.