Image caption Thalidomide was sold worldwide and eventually linked to birth defects

A lawsuit filed by more than 100 people in Australia and New Zealand who suffered birth defects caused by the drug Thalidomide has been settled.

British company Diageo, which did not distribute the drug but now owns the firm that did, agreed to pay $81m (£49m), lawyers of claimants say.

The drug, sold in the 1950s as a cure for morning sickness, was linked to birth defects and withdrawn in 1961.

The case is one of many lawsuits filed against the drug over the years.

Thalidomide was sold worldwide before it was pulled out after thousands of babies were born with deformities.

Thalidomide Thalidomide was developed by German pharmaceutical company Grunenthal

It was launched on 1 October 1957

First marketed as a sedative it was then given to pregnant women to combat morning sickness

As many as 10,000 babies were born worldwide with deformities

Thalidomide is still used today to treat the complications of leprosy and multiple myeloma

Lawyers representing the victims praised the company Diageo for agreeing to pay compensation as it has also done in the UK, says the BBC's Jon Donnison in Sydney.

But there was anger towards the drug's German manufacturer Grunenthal, which was also being sued but refused to pay out as part of the settlement, our correspondent adds.

The settlement ends the case, which means the lawsuit against Grunenthal will be dropped, according to reports.

Peter Gordon, a lawyer for the claimants, said the litigation was "difficult and challenging". "The result we have achieved today is a vindication of their [claimants] courage," he said.

The court will still have to approve the settlement.

Monica McGhie, one of the claimants, was born without limbs after her mother took Thalidomide during pregnancy 50 years ago.

"This settlement will not take that hardship away but it means I can look to the future with more confidence, knowing I can afford the support and care I need," she said.

Distillers Company, now owned by Diageo, distributed Thalidomide in Australia.

A spokesman for Diageo, Ian Wright, said he believed a fair settlement has been reached.

"We hope this settlement will bring some relief to the people who have been affected and we hope it will allow them to approach the rest of their lives with some degree of hope and more comfort," he added.

Thalidomide is still being used today to treat illnesses like leprosy and multiple myeloma.