A BID to compensate the family of murdered schoolgirl Milly Dowler, whose phone was hacked by the News of the World, is set to cost Rupert Murdoch as much as £10 million ($15 million).
It is understood that the newspaper's owners News International have made a settlement offer of around £3m, a figure that includes a £1m donation to charity.
Nothing has been signed by the Dowler family, whose lawyers were thought to be seeking a settlement figure of closer to £3.5m.
The legal fees for both sides, which are also expected to be picked-up by NI, are predicted to more than double the final cost to Rupert Murdoch's company.
The hacking of 13-year-old Milly's phone lit the blue touch paper of the phone hacking scandal, which many insiders was convinced was quietly being buried.
It led to the closure of the News of the World and the resignation of the company's chief executive, Rebekah Brooks.
The seven-figure sums under negotiation are far larger than other phone-hacking settlements reached, reflecting the fact that the phone-hacking case affected a family who were victims of crime. Thirteen-year-old Dowler went missing in March 2002 and was later found murdered.
It emerged in July that Milly Dowler's mobile phone had been hacked after her death. Voicemails were accessed on behalf of the News of the World, and messages left for her were deleted to make room for more recordings. This gave the family false hope that she was still alive, because messages were disappearing.
On Monday afternoon there was growing speculation that a deal is close, although other sources familiar with the negotiations indicated that there are still enough matters unresolved to mean that an agreement in principle had not yet been reached behind the scenes.
News Corporation boss Rupert Murdoch personally apologised to the Dowler family in the summer.
The Dowler family were among a string of crime victims and celebrities who were targeted by reporters at the News Of The World.
Settlements so far have included:
Actress Sienna Miller who received £100,000
Soccer pundit Andy Gray who received £20,000
PR guru Max Clifford may was reported to have received £1,000,000.
It is expected News International will announce the Dowler agreement at a news conference later this week.