Israel is to pay more than $1m to the family of Ben Zygier, an Australian-born Mossad agent who hanged himself in an Israeli prison, in order to avoid damaging disclosures in a court case.

The agreement will see Zygier’s family receive four million shekels, or around $1.19m, in staged payments in return for the state of Israel being absolved of responsibility for the death.

Zygier, who held Australian and Israeli citizenships, hanged himself in the Ayalon Prison in 2010. He was known as Prisoner X due to his secret incarceration, where he was facing a 10-year sentence for treason.

A judicial inquiry found that guards did not properly check his cell and that at least one CCTV camera wasn’t working. Central district court president, Daphna Blatman, said: "Failure by various elements in the Israel prison service caused his death."

The Israeli government has said that there was not enough evidence to bring charges over Zygier’s death.

Zygier's parents – who are leading figures in Melbourne’s Jewish

community - threatened to bring a legal case against the state of

Israel, claiming negligence and seeking compensation.

According to a statement from the Israeli justice ministry,

negotiations between the state of Israel and the Zygiers led to the

settlement, "under which the state agreed to pay the family of the

deceased the sum of four million shekels". The agreement was made

"without admitting claims raised against", it said.

Israel made the payment in order to avoid court action, which might have

involved the disclosure of information "which could cause real damage

to national security", the statement added.

Earlier this year, the ABC’s Foreign Correspondent program reported that the Israeli government attempted to cover up the story of Zygier’s death, urging editors of Israeli newspapers not to report the incident.

The program claimed that Zygier was imprisoned for sabotaging a Mossad mission to recover the bodies of soldiers killed in action in Lebanon. Israel has refused to comment on the reasons for his incarceration.