Online casino PartyGaming has reached a multi-million pounds settlement to end its three month feud with rival site Empire Online.

PartyGaming, the world's largest poker website, will buy Empirepoker.com for £140 million ($250) and end the legal dispute.

Empire players used to be able to put their poker skill to the test against PartyGaming's nine million customer pool but this came to an abrupt end in October.

PartyGaming then a takeover bid for its smaller rival but after talks between the two collapsed, Empire started legal proceedings in Gibraltar, claiming breach of contract.

The $250 million equates to 50p per Empire share, a ten pence per share drop on Party's aborted 60 pence a share bid - but it leaves Empire three quarters of its business.

The poker company says its 2005 account will contain a $150m non-cash provision for legal settlement costs yet it is not known how much of this has been set aside for Empire.

PartyGaming is also buying up other "white label" websites and affiliate agreements for AceClub.com and Starluck Casino.com.

A spokesman for Party Gaming PLC said: "The acquisition brings its skins strategy to a close and consolidates its leading position in online poker ahead of the launch of the fully-integrated, Party-branded platform."

The agreement is still subject to approval to Empire shareholders, who will receive the bulk of the £140 settlement, but those who hold a total of 56 per cent in shares have backed the deal.