The 14 lost their jobs from the Cheltenham base after a decision by Margaret Thatcher's government to ban union membership.

Foreign Secretary Robin Cook announced details of the package, which will compensate for lost earnings and pension rights.

Many of the 14 ex-staff have since retired but three returned to the centre after Labour restored union rights at GCHQ shortly after winning the election in 1997.

'Delighted'

Individual payouts were not disclosed, but the Foreign Office said the total cost of the package will be between �525,000 and �550,000.

Barry Reamsbottom, joint general secretary of the Public and Commercial Services union, said: "We are delighted that this has finally been settled and that the 14 members will have suffered no long term financial loss for sticking by their principles.

"We are most grateful to the prime minister and Robin Cook for taking a personal interest."

Baroness Thatcher justified the ban by arguing that industrial action at GCHQ, particularly during the 1981 civil service pay strike, had undermined the nation's security.