BP's bill for containing and cleaning up the oil spill has reached nearly $10bn (£6.4bn), as the US government declared that the blown-out well has finally been plugged, five months after the explosion on the Deepwater Horizon rig.

The beleaguered oil company revealed that its total cost of the spill had climbed to $9.5bn.

BP also said payouts to people affected by the spill such as fishermen, hoteliers and retailers had dramatically increased since it handed over authority for dispensing funds to a White House appointee.

BP has set up a $20bn compensation fund, which has so far paid out 19,000 claims totalling more than $240m. The fund is run by lawyer Kenneth Feinberg, the Obama administration's former executive pay tsar.

The oil company previously paid out about $3.5m a day in compensation, but this has risen to $12.5m a day since Feinberg took over.

However, BP's incoming chief executive, Bob Dudley, who formally takes over from Tony Hayward on 1 October, told the City a week ago that the company expects to pay out less than the committed $20bn. It has also set up a facility allowing any unpaid amounts to be paid back to BP.

The oil well that spewed millions of gallons of crude into the sea has been sealed for good. Thad Allen, the former coast guard admiral heading the US government response to the spill, declared the well "effectively dead" following a pressure test by BP yesterday.

"Additional regulatory steps will be undertaken but we can now state, definitively, that the Macondo well poses no continuing threat to the Gulf of Mexico," he added.

The spill was halted in July with a temporary cap while a relief well was completed. That well finally reached the main shaft on Thursday, permitting a cement plug to be pumped in.