A dispute over quarrying the Portland Coastal Strip has been settled in an out-of-court agreement between Dorset County Council and Portland Stone Firms Ltd.

The matter was due to be heard by a Lands Tribunal in June.

Portland Stone Firms had an historical planning permission to extract Portland limestone from the coastal strip, which is now part of the highly environmentally protected Jurassic Coast.

Dorset County Council prevented Portland Stone Firms from quarrying the stone and the firm wanted compensation, which the County Council has now agreed to pay, although it will be reimbursed by the central government Department for the Environment, Food & Rural Affairs.

Portland Stone Firms, headed by Geoff Smith, had claimed £18million. The County Council said the sum should be less. The amount settled upon has not been made public.

The dispute arose when planning permission granted in 1951 for quarrying on the coastal strip was amended in 2009 to protect the special conservation area.

A spokesman for the council has said Portland Stone Firms will be encouraged to mine its stone, as competitor Albion Stone does, where possible rather than continue with opencast quarrying.

Stone Firms has previously claimed it may be forced to push ahead with plans to quarry the stone from the coastal strip if a tribunal didn't rule in its favour.

Dorset County Council says it is pleased with the settlement, which was less than Stone Firms had sought. Each side had settled its own costs. The surface rights are still in place for part of the site and the option to switch to mining through a new application still exists. The planners think it is the most likely outcome.

The planners are focussed on the stalled ROMP (review of old mining permissions), and Stone Firms is going to have to produce new environmental work to protect its remaining historic permissions.