Recasts with new details

By Michael Holden and Sam Tobin

LONDON, Jan 22 (Reuters) - Prince Harry settled his privacy claim against Rupert Murdoch's UK newspaper group on Wednesday after the publisher admitted unlawful actions at its Sun tabloid for the first time, bringing the fiercely-contested legal battle to a dramatic end.

In a stunning victory for Harry, 40, the younger son of King Charles, News Group Newspapers (NGN), publisher of The Sun and the now-defunct News of the World, also admitted it had intruded into the private life of his late mother, Princess Diana.

Harry's lawyer, David Sherborne, said the publisher had agreed to pay the prince substantial damages. A source familiar with the settlement said it involved an eight-figure sum.

Harry had been suing NGN at the High Court in London, accusing its newspapers of unlawfully obtaining private information about him from 1996 until 2011.

The trial to consider the royal's case, and a similar lawsuit from former senior British lawmaker Tom Watson, was due to start on Tuesday but following last-gasp talks, the two sides reached a settlement, with NGN saying there had been wrongdoing at The Sun, something it had denied for years.

"NGN offers a full and unequivocal apology to the Duke of Sussex for the serious intrusion by The Sun between 1996 and 2011 into his private life, including incidents of unlawful activities carried out by private investigators working for The Sun," Sherborne said.

"NGN further apologises to the Duke for the impact on him of the extensive coverage and serious intrusion into his private life as well as the private life of Diana, Princess of Wales, his late mother, in particular during his younger years."

ACCOUNTABILITY

NGN has paid out hundreds of millions of pounds to victims of phone-hacking and other unlawful information gathering by the News of the World, and settled more than 1,300 lawsuits involving celebrities, politicians, well-known sports figures and ordinary people who were connected to them or major events.

But it had always rejected any claims that there was wrongdoing at The Sun newspaper, or that any senior figures knew about it or tried to cover it up, as Harry's lawsuit alleges.

Harry said his mission was to get the truth and accountability, after other claimants settled cases to avoid the risk of a multi-million pound legal bill that could be imposed even if they won in court but rejected NGN's offer.

He said the reason he had not settled was because his lawsuit was not about money, but because he wanted the publishers' executives and editors to be held to account and to admit their wrongdoing.

(Reporting by Michael Holden and Sam TobinEditing by Kate Holton and Gareth Jones)

((michael.holden@thomsonreuters.com;))