Stormy Daniels, whose real name is Stephanie Clifford, filed suit in federal court in January

Porn star Stormy Daniels has settled a lawsuit against the city of Columbus, Ohio, for $450,000, receiving the payout after she charged that police arrested at a strip club in retaliation for her claim that she had an affair with Donald Trump.

Columbus police arrested her during her performance at the Sirens Gentlemen's Club on a misdemeanour sex offence for touching three customers who were undercover vice detectives. The charge was dropped hours later.

"It could have been a lot more with a jury but we recognised that was the number that would get justice and would get attention and we agreed to that," attorney Clark Brewster told reporters from the courthouse steps, standing alongside Daniels.

Daniels, whose real name is Stephanie Clifford, filed suit in federal court in January, alleging police were politically motivated when they arrested her. She originally sought $2 million in damages.

Daniels has described having an affair with Trump before he became president and receiving hush money through his former lawyer Michael Cohen.

Cohen pleaded guilty last year to directing payments of $130,000 to Daniels and $150,000 to Playboy model Karen McDougal to avert a scandal shortly before the 2016 presidential election.

Trump has denied having the encounters more than a decade ago with Daniels and McDougal.

Daniels' lawsuit alleged the Columbus vice unit officers who arrested her were registered Republicans, as is the president, and retaliated by arresting her during her performance.

Brewster, Daniels' lawyer, credited city officials for how they handled the case.

"The city of Columbus took responsibility and understood it and did a proper investigation and was critical of their own people. And today we got this case settled," Brewster said.

Daniels said she would use the money to pay her legal bills and that she was about to start touring as a stand-up comedian.

"To do any of this, you have to have a good sense of humour," Daniels told reporters, adding she was proud of how Columbus "took responsibility and is actively making changes and holding those officers accountable."

Daniels and her lawyer offered no further details of what changes police would institute, and the Columbus city attorney's office did not immediately respond to a request for comment.

Meredith Tucker, a spokeswoman for the city attorney's office, told other media the parties reached a settlement of $450,000 during mediation, an amount that was "fair given the facts and circumstances involved."