German car maker Volkswagen will fork out as much as $127 million to Australian drivers to settle class actions brought over its "diesel-gate" emissions scandal.

Volkswagen on Monday agreed to the confidential settlement agreement with two law firms running class actions over its allegedly false claims that pumped up the green credential of its gas-guzzlers.

Under the agreement, which must be approved by the Federal Court, a minimum of $87 million will be available to Australian motorists. Credit:Michael Sohn

The two class actions involve around 100,000 Volkswagen, Audi and Skoda EA189 diesel vehicles sold in Australia.

The settlement will deliver at least $87 million to affected motorists. That number is able to rise to $127 million depending on the number of drivers that seek to access the claim. The payout is equivalent to $1,400 per affected vehicle.