The money will be paid to the Commonwealth Games Federation (CGF), Commonwealth Games Federation Partnerships and Commonwealth Games Australia, although the breakdown of how the money has been distributed has not been disclosed.

Former New Zealand judge Kit Toogood and the former Chief Justice of the Supreme Court of Western Australia the Honourable Wayne Martin acted as joint mediators, after the parties agreed to refer the dispute to mediation.

Following discussions it was concluded that "the multi-hub regional model was more expensive to host than traditional models."

Victoria State Premier Daniel Andrews announced the shock decision to terminate the city’s contract to host the Games last month.

Andrews told a media conference following the news that Victoria was withdrawing from hosting the Games that he would not "take money out of hospitals and schools in order to fund an event that is three times the cost [which] is estimated and budgeted for last year."

He claimed that "with 973 days until the start of the Games, the original forecast budget for the event of AUD$2.6 billion (£1.3 billion/$1.7 billion/€1.5 billion) was now expected to be AUD$6 billion (£3.1 billion/$4 billion/€3.6 billion)."

Opposition politicians called Andrews’ decision "damaging" to Victoria’s reputation as a venue for major sporting events, while Commonwealth Games Australia said the announcement was "beyond disappointing."

Victoria 2026 lawyers flew to London last month in a bid to try and reach a compensation deal with the CGF but returned home having been unsuccessful.

Speaking exclusively to insidethegames at this month’s Commonwealth Youth Games in Trinidad and Tobago CGF President Dame Louise Martin said she was confident that the Commonwealth Games would take place in 2026 and 2030.

This year’s CGF General Assembly is due to take place in Singapore from November 11 to 14, with CGF chief executive Katie Sadleir promising to provide "a much more concrete plan" on how the CGF plans to deal with the current absence of a host for the 2026 Commonwealth Games then.

The CGF were unable to comment further when approached by insidethegames.