THE tobacco industry, which once vowed it would never settle lawsuits over smoking, is on the verge of reaching a deal in which it could pay as much as 8370 billion (£245 billion) to do just that and more, source close to the talks said last night.

In what would be an historic agreement, the tobacco companies would settle hundreds of lawsuits, launch major new antismoking programmes and sharply curtail cigarette advertising.

"We have made tremendous progress ... We got more concessions from the industry today. We hit three triples and scored a few runs. We are very optimistic we can resolve this matter very, very soon," Mississippi Attorney General Mr Mike Moore, the key state negotiator, said.

Sources involved in the talks being held at a Washington hotel said they expected a deal would probably be announced today.

Although Mr Moore would not reveal details of the talks, the sources said the parties are discussing a fund of as much as 8370 billion to be paid out over 25 years. The money would be used for health programmes, to settle state suits and certain class actions and to pay for damages in individual cases.

The sources said that under the proposal, punitive damages would not be allowed for individual cases alleging past wrongful behaviour. These damages, however, which are awarded to punish and deter wrongful behaviour, would be allowed if cigarette companies engage in future wrongdoing.

Part of the package, about 850 billion, is being proposed to specifically "punish" the industry and the amount would be used to pay for health coverage for uninsured children, sources said.