Owners of more than 480,000 diesel cars fitted with cheating devices in the US are set to receive up to $7,000 in compensation.
Volkswagen has reportedly agreed to pay $10.2bn (£6.9bn) to settle claims in the US resulting from its diesel emissions scandal.
Most of the money will go to compensate the owners of some 482,000 cars in the US which were implicated in the cheating scandal, according to reports.
Owners of 2.0-litre diesel cars could receive between $1,000 and $7,000 (£4727) in cash each, depending on the age of their vehicles.
The German car maker has also reportedly agreed to fund a programme to fight air pollution.
Volkswagen admitted last Autumn that it had installed software on diesel cars that tricked US emissions tests into finding they met environmental standards.
Switching off the testing programme caused the cars to release more than 40 times the legal limit of nitrogen oxide.
The cheat devices were ultimately found to have been installed in 11 million VW, Porsche and Audi cars with diesel engines worldwide.
The settlement was reportedly reached in a civil lawsuit in San Francisco, which accuses the carmaker of causing major damage to the environment.
Sources close to the negotiations say the agreement remains tentative and could change by the time the terms are officially announced by the judge on Tuesday.
VW has set aside 16.2 billion euros ($18.4bn) to cover the costs of the scandal.
It still faces similar charges in the US over its 3.0-litre diesel cars, as well as a criminal investigation and fines which could run into the tens of billions from US regulators.
It is also facing further charges in Europe.
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