Labour MP Siobhain McDonagh accepted "very substantial" damages and a public apology at the High Court today over phone hacking.
A judge in London heard that in October 2010 her private mobile telephone was stolen from her car in south west London.
David Sherborne, representing the MP for Mitcham and Morden, told Mr Justice Vos that in June last year police notified her that they had "obtained evidence that The Sun newspaper had accessed her text messages from about October 2010 and therefore appeared to have accessed and/or acquired her mobile phone".
A QC told the court on behalf of the newspaper that it was accepted that Ms McDonagh's mobile phone "should not have been accessed and used and furthermore accept that there has been a serious misuse of her private information".
The announcement of Ms McDonagh's settlement came during the 14th case management conference relating to civil damages actions brought by scores of people from all walks of life over the phone-hacking scandal.
At the beginning of proceedings today, Hugh Tomlinson QC told the court that there had been "substantial developments" since the previous case management hearing.
A number of further arrests had been made "in what the Metropolitan Police Service have characterised in their public statement as a new conspiracy to intercept voice mail messages".
He added that it involved "potentially hundreds of victims".
Tomlinson, who represents claimants in the action, said it was "not known at the moment how many more claims may be issued".
Sherborne said the defendants – the publishers and/or owners of The Sun – had agreed to pay Ms McDonagh "very substantial damages" and her legal costs.
Dinah Rose QC, for the defendants, told the judge: "Through me they offer their unreserved apology to the claimant for what has happened.
"Furthermore they have undertaken to the court not to use any information so obtained nor to access or attempt to access by unlawful means the claimant's private information."
Sherborne said that "in these circumstances the claimant has obtained significant protection and vindication of her privacy rights and she is therefore content not to pursue this matter any further".