Updated April 13, 2017 12:35:57

Photo: The Daily Mail said it accepted the allegations published about Ms Trump were "not true". (Reuters: Mark Kauzlarich)

The Daily Mail has apologised and agreed to pay damages to US first lady Melania Trump after it published an article saying she offered "services beyond simply modelling" in her former job.

US President Donald Trump's wife, 46, had sued the publisher of the Daily Mail in Britain and also filed a $US150 million ($200 million) lawsuit against it in New York, claiming the article had cost her millions of dollars in potential business.

The article, which ran in the newspaper under the headline "Racy photos and troubling questions about his wife's past that could derail Trump", was published last August.

Ms Trump's lawyers argued the report damaged her ability to build businesses based on her status as a "successful businesswoman".

The total settlement for the US and UK lawsuits was about $US2.9 million, according to a person familiar with the settlement who spoke to AP on condition of anonymity. The information was not released in court.

As part of the settlement, The Daily Mail published an apology for the article and issued a retraction on its home page.

"An article on 20th August 2016 about Melania Trump … questioned the nature of her work as a professional model, and republished allegations that she provided services beyond simply modelling," publisher Associated Newspapers said.

"We accept that these allegations about Mrs Trump are not true and we retract and withdraw them … we have agreed to pay her damages and costs."

Catrin Evans, lawyer for the Mail's publisher, told a hearing at London's High Court that the company wanted "to set the record straight, and to apologise to the claimant for any distress and embarrassment that the articles may have caused her".

Ms Trump's lawyer John Kelly said the article was published as a two-page spread and accompanied by an old photo of Ms Trump standing naked with her front against a wall but looking back at the camera.

"Readers of the newspaper that day could not fail to miss the article," Mr Kelly told the court.

"The article included false and defamatory claims about the claimant which questioned the nature of her work as a professional model.

"The suggestion that such allegations even merit investigation is deeply offensive and has caused a great deal of upset and distress to the claimant."

AP/Reuters

Topics: donald-trump, print-media, arts-and-entertainment, world-politics, united-states, united-kingdom

First posted April 12, 2017 22:26:17