ACT taxpayers will be slugged with a $280,000 legal bill on behalf of Liberal MLA and former opposition leader Jeremy Hanson, who will pay costs to former CFMEU boss Dean Hall, after settling a long-running defamation case.

Key points: Liberal Jeremy Hanson settles defamation dispute with union boss

Liberal Jeremy Hanson settles defamation dispute with union boss Taxpayers to foot bill for saga

Taxpayers to foot bill for saga CFMEU's Dean Hall says he has been "totally vindicated"

Mr Hanson has also officially apologised to Mr Hall over his comments during a 2016 radio interview, in an embarrassing backdown wrapping up more than two years of legal action.

The now-retracted comments falsely insinuated Mr Hall had a criminal past.

The case was due to end in a Supreme Court showdown in October.

The ABC understands taxpayers will foot Mr Hanson's legal costs after he was granted indemnity by the ACT Labor Government, which could leave the total bill hundreds of thousands of dollars higher.

Mr Hall said he had been "totally vindicated".

"It was only ever about an apology," he told the ABC.

"Unfortunately, it turned into a farcical process and took far too long and cost a hell of a lot of money for the ratepayers of the ACT.

"I apologise for that, but the reality is I needed my name to be cleared and this was the only process I could do it through."

The former CFMEU boss, who now works with the Tradies Group, was not awarded damages, but the payout compensates him for his legal costs.

The official apology from Mr Hanson. ( Supplied )

MLAs can apply for taxpayer-funded financial assistance to the Attorney-General of the day for incidents that occur during official duties.

Mr Hanson was granted assistance by former Labor attorney-general Simon Corbell before he retired from the Assembly.

Mr Hall said the case went on "far too long".

"I think when people are given an open cheque … and don't have to have any personal responsibility or financial responsibility for an outcome, I don't think it helps the process of people settling quickly," Mr Hall said.

A spokeswoman for Mr Hanson said he would not be making any comment because the matter was still before the court.

'No convictions, no charges'

Mr Hall brought the defamation action against both Mr Hanson and Canberra talkback radio station 2CC, where the interview was aired.

The radio station settled with Mr Hall months later and apologised on air.

"I accepted the first apology straight away from 2CC and moved on from them. I would have done the same for Mr Hanson," Mr Hall said.

"It's disappointing the ACT taxpayer had to underwrite this.

"It could have been fixed very easily, it was a clear-cut case, he said something wrong about me and he just needed to clear the record."

Mr Hanson's apology letter retracts the comments he made on air.

"I know that you do not have any criminal convictions nor that you are facing any criminal charges," the letter addressed to Mr Hall said.

"To the extent my words suggested that you had any criminal convictions or are facing any criminal charges, I retract any such words and I apologise for any hurt and distress this has caused you."

No admission of liability by Hanson

The deed of settlement and release, seen by the ABC, is dated August 14 and orders Mr Hanson to pay Mr Hall's reasonable legal costs to the sum of $280,000.

It states parties agreed to settle the dispute without any admission of liability and dismiss the proceedings.

It also includes directions to vacate the trial set down for October 15.

Mr Hall said his lawyers believed he had "one of the strongest defamation cases they had seen" but was advised a trial could cost more than $1 million.

"I made a decision that I wasn't prepared to run a very long and expensive court case which I was very confident I was going to win just so I could get money out of the process," he said.

He said MLAs making public statements should ensure they are true and stand by them.

"At some point you can't just [blatantly not] tell the truth about people because it does affect them, not only in their professional roles but through their families," he said.

"I guess the mistake was made that it was said in a public forum."

Applications for taxpayer-funded financial assistance are approved by the Attorney-General against assembly guidelines and are funded out of the territorial legal expense account.