A British Muslim lawyer has won an apology and a record compensation payout after she was suspended for making a joke about Osama bin Laden, officials and reports said Saturday.

Halima Aziz was suspended from work by the Crown Prosecution Service (CPS) following the offhand remark weeks after the September 11, 2001 attacks in the United States.

The case has dragged on over the last seven years, but on Friday the CPS, the official prosecuting body in England and Wales, said it had offered a full apology."

The CPS also agreed to pay her STG600,000 ($A1.3 million) in compensation, according to documents cited by Channel Four News on its Friday evening television bulletin.

Aziz made the disputed comment in October 2001, after a court guard in Bradford, northern England, questioned whether she was a security threat. "I'm a friend of bin Laden's," she joked.

Following her suspension she took the case to an employment tribunal alleging racial discrimination - that she would not have been treated similarly if she had been white - and won the case in 2002.

The CPS appealed and the ruling was overturned in 2005 - but a Court of Appeal decision the following year restored the 2002 verdict backing the lawyer.

The amount of her compensation emerged on Friday, when Aziz welcomed the apology and definitive ruling.

"If they had apologised to me right at the beginning words would have been enough. I am 100 per cent certain this would not have happened unless I had been a Muslim and Asian," she said.

'Not about money'

She was hoping to use the payout to build an orphanage in Pakistan, she said, adding that the case was not about money but "about getting my job back and saying what (they did) was wrong."

In a statement the CPS said: "The CPS accepts the recommendations made by the Employment Tribunal and will be implementing them as a matter of priority. We offer a full apology to Halima Aziz."