Prime Minister John Key acknowledged that "Teapot Tapes" cameraman Bradley Ambrose did not deliberately tape his conversation with ex-ACT leader John Banks.
But although he has made a "small payment" towards Ambrose’s legal costs, there will be no apology.
Mr Key's contribution came from the tax-payer funded Leader's budget – a fund which goes to all parties in Parliament.
"The exact sum is confidential, but it is a pragmatic payment in the context of what it would have cost to defend in court," Mr Key said.
The Teapot tapes scandal blew up towards the end of the 2011 election campaign, during a media stunt at a Newmarket café.
The exact sum is confidential, but it is a pragmatic payment in the context of what it would have cost to defend in court- John Key
Mr Key accused Mr Ambrose of "News of the World-style tactics", but Mr Ambrose has always maintained the recording was an accident – and took legal action against the prime minister.
In a statement today, a spokeswoman for Mr Key said: "Mr Key made a number of comments in the media to the effect that Mr Ambrose had deliberately recorded the conversation between Mr Key and Mr Banks, and compared Mr Ambrose’s conduct to the News of the World.
"These comments caused harm to Mr Ambrose personally and professionally. The comments reflected Mr Key’s honestly held views at that time.
"Mr Key and Mr Ambrose have met to discuss the events of that day. Mr Key now accepts that Mr Ambrose did not deliberately record the conversation, or otherwise behave improperly.
"Mr Ambrose now accepts that Mr Key believed that the conversation had been deliberately recorded at the time Mr Key made his statements."
Mr Ambrose would only say that he was “extremely relieved” and it was "time to start moving on".
Labour leader Andrew Little said "John Key smeared Bradley Ambrose’s name on television in the middle of a high-profile political campaign".
"By attacking an innocent New Zealander for political gain he made it difficult for Mr Ambrose to get work and undermined his character. He has yet again demeaned the office of Prime Minister."