Canada has paid a settlement of C$10.5m ($8.1m) to former Guantanamo Bay inmate Omar Khadr, reports say.

The payout was given to Khadr on Wednesday and was cashed immediately, the Globe and Mail newspaper reported on Thursday, citing a source involved in the transaction.

The government and Khadr's lawyers negotiated the deal last month, based on a 2010 Supreme Court ruling that said Canadian intelligence officials obtained evidence from Khadr under "oppressive circumstances".

According to the ruling he was subjected to sleep deprivation during interrogations at Guantanamo Bay in 2003, and information obtained from him was then shared as evidence with US officials.

A Canadian citizen, Khadr was captured in Afghanistan in 2002 at age 15 after a gun battle with US soldiers.

He pleaded guilty to killing a US Army medic and became the youngest inmate held at the military prison in Cuba. Khadr later recanted and his lawyers said he had been grossly mistreated.

READ MORE: Canada 'to apologise, pay Omar Khadr'

Khadr spent a decade in Guantanamo before being returned to Canada in 2012 to serve the rest of his sentence and was released in 2015.

Toronto-born Khadr was taken to Afghanistan by his father, an al-Qaeda member, who apprenticed the boy to a group of bomb makers. The father died in a battle with Pakistani forces in 2003.

His case has divided Canadians. Human rights advocates such as Amnesty International say the one-time child soldier was denied due process while the then-Conservative government dismissed calls to seek leniency, noting he had pleaded guilty to a serious crime.

After his 2015 release from prison in Alberta, Khadr apologised to the families of the victims. He had said he rejects violence and wanted a fresh start to finish his education.

He currently resides in an apartment in Edmonton, Alberta and is studying to be a nurse.