Lord Bramall is set to receive £100,000 in compensation from Scotland Yard over its bungled VIP paedophile inquiry.

The 93-year-old ex-military chief, whose home was raided at dawn by 22 officers after he was falsely accused of child sex abuse, has been offered a ‘substantial’ sum.

The Mail has learned the Metropolitan Police, which spent £2.5million on the inquiry, has negotiated ‘hard’ over compensation, saying it would have to come out of its policing budget.

The 93-year-old ex-military chief (pictured here in 1995) whose home was raided at dawn by 22 officers after he was falsely accused of child sex abuse, has been offered a ‘substantial’ sum

But a former senior detective said last night: ‘This is a ludicrous argument, given how much money was wasted on Operation Midland in the first place. If the Met cared so much about budgets, why did it drag out the inquiry for so long?’

Sources confirmed the Met is ‘very keen’ to settle legal action threatened by Lord Bramall, and that a six-figure pay-out is close to being agreed. The Mail understands it is in the region of £100,000, less than previously expected and significantly lower than payouts in other high-profile cases.

It comes five months after Lord Bramall received an apology over the police raid from departing Met boss Sir Bernard Hogan-Howe, who expressed regret for the time his officers took to drop the investigation into the former Chief of the Defence Staff.

Now, days after the police watchdog cleared a string of senior officers of blame over the investigation into VIP child abuse, the Met has offered to pay damages to Lord Bramall.

A final settlement of his claim is expected later this month, sources said. The payout has been sanctioned by senior figures in City Hall in London, who oversee the running of the Met.

D-Day veteran Lord Bramall had been advised he has a strong case. He had instructed a QC to represent him and a ‘letter before action’, outlining his complaints against the Met, was sent earlier this year.

His wife, who was terminally ill at the time of the raid two years ago, died before the Met announced he was exonerated.

Although he was reluctant to sue, Lord Bramall was keen to ensure that the Met learns lessons. He is expected to donate the money to a charity.

Former judge Sir Richard Henriques produced a scathing review of Operation Midland last year, identifying 43 key failures. He criticised detectives for saying lurid claims of child murder and abuse from their key witness, a man known only as ‘Nick’, were ‘credible and true’.

The report attacked the use of inaccurate information to obtain search warrants and the delay in concluding the case.

Sir Bernard announced his retirement weeks before the report was published. He left the Met last month.

In October Lord Bramall, who was never arrested and always denied the allegations by Nick, hit out after Sir Bernard’s apology, saying: ‘Although police knew from very early on I had no case to answer … they didn’t want to be accused of not investigating it properly.

‘Sir Bernard told me, “We couldn’t take you out of it earlier” because it would look like I had preferential treatment.’

Lord Bramall said he did ‘not want to be too hard on the police’, and gave credit to Sir Bernard for setting up the Henriques inquiry

The ex-military chief said Sir Bernard had asked to meet face to face after being made aware of the Henriques report’s tone.

‘As someone … who has suffered great distress and whose reputation and integrity has been questioned as a result of the misguided Operation Midland, I am very pleased to have received this apology,’ Lord Bramall said.

But he told the Daily Telegraph: ‘My wife died without me being cleared. It didn’t come into their consideration that my wife was dying.’

Lord Bramall said he did ‘not want to be too hard on the police’, and gave credit to Sir Bernard for setting up the Henriques inquiry.

He added: ‘The trouble was, after the apparent mistakes back in 2012 relating to revelations of very serious and serial child abuse, a mixture of public outrage and propaganda … put immense pressure through the Home Secretary, on the police.’

This situation, he said, produced a ‘witch-hunt culture’.

Former Tory MP Harvey Proctor, falsely accused by Nick, is expected to make a claim for damages over his treatment by Operation Midland.

Diana Brittan, widow of Lord Brittan who was also the subject of bogus claims by Nick, is considering legal action against the Met after their homes were raided weeks after the former home secretary died.

Nick, who cannot be identified for legal reasons, is being investigated for allegedly attempting to pervert the course of justice.

Last night the Met said of Lord Bramall’s settlement: ‘The Metropolitan Police Service is keen to resolve this matter as quickly and fairly as possible, balancing the fact any settlement will be made from public funds.’