The family of Jean Charles de Menezes "are pleased that a compensation package has been agreed which enables them to put these events behind them and move forward with their lives", Scotland Yard declared.
It did not say how much the deal was worth and said that no further comments would be made on the agreement.
De Menezes, 27, was shot seven times in the head in a train at Stockwell underground station, south London, on July 22, 2005, the day after a failed
attempt to replicate the July 7 attacks in which four suicide bombers killed 52 people.
His family has long campaigned for justice, but an inquest into his death in December returned an open or inconclusive verdict.
In February prosecutors said they would not press charges against the police officers involved.
At that point, the De Menezes family said they would end their legal battle to see an individual brought to account for his death.
De Menezes's mother, however, said she was not aware of the deal, according to the G1 news website, which interviewed her by telephone at home in rural Brazil.
But Maria Otone de Menezes added: "For me, this is over."
She said there was confusion over the purported deal because the family had withdrawn from two cousins living in London who had followed the unsuccessful legal action taken against police for the killing.
"We don't have any contact with them," she said.
She declined to respond to a question about whether a report on a possible reduced compensation amount was fair.
The Daily Mail newspaper had suggested it could be worth just £100,000 ($180,000), saying it was scaled down because De Menezes, an electrician, would not have been able to give his family in Brazil much financial support.
The newspaper also reported that a confidentiality clause had been included in the compensation deal.
Metropolitan Police Commissioner Paul Stephenson apologised once again for the death of De Menezes, who he said was a "totally innocent victim".
"The commissioner would like to take this opportunity of making a further unreserved apology to the family for the tragic death of Jean Charles de Menezes and
to reiterate that he was a totally innocent victim and in no way to blame for his untimely death," he said.


