Sony BMG has reached a tentative settlement to end a string of court cases brought against the the record label in the United States, after it was shown to have infected consumers' computers with potentially dangerous software.

Last month the company was forced to admit that the controversial "spyware", which was embedded in millions of its music CDs, left computers vulnerable to attack from malicious hackers. The software, which was automatically installed on to computer once an affected CD was inserted, was designed to protect the company's copyright and prevent bootleg copies of tracks being made.

Sony added the software to more than 80 of its titles, for artists ranging from Britney Spears to Billie Holiday. Millions of CDs were recalled from shops during the busy pre-Christmas shopping period.

"We hope that other record labels will learn from Sony’s hard experience and focus more on the carrot of quality music and less on the stick of copy protection," said the Electronic Frontier Foundation (EFF), one of the groups that sued Sony BMG.

The EFF case sought to compel Sony BMG to "repair the damage" to computers caused by two separate anti-piracy programs, First4Internet XCP and SunnComm MediaMax, which it said were installed on more than 24 million music CDs.

Another case had been filed by Texas Attorney General Greg Abbott, alleging that Sony BMG violated that state’s anti-spyware law with its XCP anti-piracy program, which installed hidden files when the CDs were inserted into a PC.

Under the settlement filed with the court, Sony BMG will also allow customers to choose from two compensation packages. One offers a cash payment of $7.50 and a download of an additional album from an online list of more than 200 titles. The other would offer three album downloads.

It is understood that the proposed settlement will be heard by a New York federal judge around January 6.

Mark Russinovich uncovered the first piece of controversial Sony software on his blog, sysinternals.com last month. The American Government, Microsoft and several anti-virus companies issued warnings following Mr Russinovich's report.

Sony quickly found itself facing several legal cases in America after being critcised for not telling customers about the spyware programme – known as a "rootkit" – earlier. Rootkits are often used by hackers to hide viruses on hard drives and several virus writers had begun distributing malicious codes that took advantage of the Sony security flaw.

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