Chairman James Murdoch of News Corp.'s News International unit is said to have personally approved the offer to the family of Milly Dowler, The Daily Telegraph reported.
The settlement is three times larger than any other phone hacking victim received and reflects the gravity of the actions of News of the World journalists in accessing the voicemails of the dead 13-year-old.
Unlike other victims, the Dowler family hasn't filed a lawsuit against the parent company, The Wall Street Journal reported Tuesday.
News Corp. Chairman Rupert Murdoch apologized to the Dowler family during a meeting in July.
London's Metropolitan Police are currently conducting a criminal investigation of phone hacking and other allegations of wrongdoing at News of the World.