The Birmingham Mail, Birmingham Post and Sunday Mercury have been successfully sued by a businessman they falsely claimed was involved in a bomb plot to blow up transatlantic planes.

The papers' owners, Trinity Mirror, along with the Guardian, The Times and the Daily Mail, have agreed to pay "substantial" libel damages to Abdul Rauf, the proprietor of a Birmingham-based bakery and cake distribution service.

Media Lawyer reports that his solicitor, Isabel Hudson, told Mr Justice Gray at the High Court in London that the articles suggested there were reasonable grounds to suspect Mr Rauf was involved in funding, or having some involvement in, an alleged "liquid bombs" plot.

The allegations were untrue, and the articles in August last year caused Mr Rauf significant embarrassment and distress at a time of particularly heightened sensitivity in relations within the Muslim community, she said.

Despite some of the articles suggesting he had been arrested, Mr Rauf had never been arrested or detained by police on suspicion of involvement in any terrorist activities and there were no grounds for suspecting any such involvement.

Guardian Newspapers, Associated Newspapers, Times Newspapers and Trinity Mirror have already published full apologies and agreed to pay Mr Rauf substantial undisclosed damages and his legal costs.