Heather Mills, wife of ex-Beatle Sir Paul McCartney, today accepted £50,000 libel damages over a newspaper article.

The Sunday Mirror wrongly suggested there were grounds for suspecting her of dishonesty over cash collected for an earthquake appeal.

The 34-year-old former model, who lives in Hove, was not at the High Court in London to hear the reading of an agreed statement before Mr Justice Gray.

Her counsel, Thomas Shields QC, said the "highly damaging and wounding" allegations, in a Sunday Mirror report in May, were "wholly without foundation".

Publicist Anya Noakes said later: "Heather Mills is pleased the Sunday Mirror has recognised the allegations were unfounded and that her reputation has been vindicated."

All the money has been donated to the charity Adopt-A-Minefield (UK) which Miss Mills founded and which is dedicated to the innocent victims of land mines.

Miss Mills - Lady McCartney since her marriage earlier this year - had brought the action against MGN Limited, which also agreed to pay her legal costs.

Mr Shields told the judge in January 2001 there was an earthquake in Gujarat and Miss Mills went to the area to assist relief workers, accompanied by a photographer for Hello! magazine.

The magazine agreed to pay £50,000 for the use of the photographs which, at Miss Mills' suggestion, was donated to charity.

Half went to the Jaipur Limb Foundation, a hospital making synthetic limbs, the other half to the Lion's Charitable Trust, based in India but well known throughout the world.

Hello! also agreed to help launch an appeal for public contributions and more than £18,000 raised was accounted through Miss Mills's office to the Lion's Charitable Trust.

Mr Shields said the Sunday Mirror article left the reader with the impression there were reasonable grounds to suspect Miss Mills had been guilty of dishonesty or a serious lack of proper accounting in relation to £250,000 allegedly raised in that only £25,000 had ever been distributed.

The total raised was slightly more than £68,000 and all of it had been properly distributed.

There was also no truth in the suggestion she was being investigated by the Charity Commission because she had failed to register the Lion's Charitable Trust in England and Wales.