The State has agreed to pay Roseanne Beckett nearly $4.092 million in damages.
This relates to two counts of malicious prosecution.
Attorney General Gabrielle Upton issued a statement saying: “After 26 years this saga must end. This is the right thing to do.”
“Her case is extraordinary and requires a sensitive response after so long including 10 years of imprisonment for Ms Beckett,” Ms Upton said.
“Roseanne Beckett has been through enough and should not have to fight the government anymore. She deserves the right to move on.”
A group, including Blaxland campaigner Mary Court, fought to free Ms Beckett.
Mrs Court, an administration manager, met Ms Beckett (then Catt) 19 years ago at Emu Plains prison farm, and started the Free Roseanne campaign soon after.
Ms Upton said payment for Ms Beckett would be made “shortly”.