Former Guantanamo Bay detainees who accused British security forces of colluding in their torture overseas are to receive millions of pounds in compensation, the government is set to announce Tuesday.

Justice Secretary Ken Clarke will make a statement to the House of Commons, officials said, following media reports that an out-of-court settlement has been reached with former prisoner Binyam Mohamed and around nine others.

The announcement follows weeks of negotiations between lawyers for the two sides and will see one prisoner receive more than one million pounds (US$1.6 million, 1.1 million euros), according to the ITN broadcaster.

It is thought the government has decided it is better to settle rather than risk the release of secret documents during any open court case, although the exact amounts of compensation are expected to remain confidential.

In February, a British court released secret evidence that Mohamed, an Ethiopian-born resident of Britain, had been subjected to “cruel, inhuman and degrading” treatment during questioning by US agents.

The information was made public in defiance of ministers’ warnings that such disclosures could harm Britain’s intelligence-sharing relationship with Washington.

British citizens and residents who were held at the US detention camp at Guantanamo Bay in Cuba will be among those receiving compensation, reports said, as well as others who claim British agents colluded in their ill-treatment while held as part of the so-called “war on terror”.

Clarke was due to announce the settlement in a written statement to parliament but the opposition Labour party tabled an urgent question requiring him to explain the deal to lawmakers in person, a Labour spokesman said.

In July, Prime Minister David Cameron announced an inquiry into claims Britain’s security services were complicit in the torture of suspected violent extremists on foreign soil after the September 11, 2001 attacks.

He also said that “wherever appropriate”, compensation would be offered to people who had brought civil court actions over their treatment.

“While there is no evidence that any British officer was directly engaged in torture in the aftermath of 9/11, there are questions over the degree to which British officers were working with foreign security services who were treating detainees in ways they should not have done,” Cameron said at the time.

“The longer these questions remain unanswered, the bigger the stain on our reputation as a country that believes in freedom, fairness and human rights grows.”

Mohamed was arrested in Pakistan in 2002 after the US claimed he fought for the Taliban. He was shuttled by authorities between Pakistan, Morocco and Afghanistan and in September 2004 was taken to Guantanamo.

He was released in 2009, and his lawyers claimed in court he had been tortured.

Responding to news of the compensation, Shami Chakrabarti, director of campaign group Liberty, said: “It’s not very palatable but there is a price to be paid for lawlessness and torture in freedom’s name.

“There are torture victims who were entitled to expect protection from their country.

“The government now accepts that torture is never justified and we were all let down — let’s learn all the lessons and move on.”

The inquiry into the torture allegations, led by a judge, was due to start before the end of 2010 and was expected to report within 12 months.

The prime minister also announced plans to look again at how British courts handled intelligence, admitting relations with the United States had been “strained” over the disclosure of secret information in Mohamed’s case.

MI6 chief John Sawers, the head of Britain’s foreign spy service, said last month torture was “illegal and abhorrent under any circumstances and we have nothing whatsoever to do with it”.