The Crown Prosecution Service and West Midlands Police are to publicly apologise and pay a six-figure sum for accusing a Channel 4 documentary exposing extremism in Britain's mosques of misleading editing, the broadcaster said.

The apology will be made at the High Court following the broadcaster's decision to launch libel proceedings against police and the CPS.

A press release issued by police and the CPS last year claimed that the Dispatches programme misrepresented the views of Muslim preachers and clerics with misleading editing.

Police reported Channel 4 to TV watchdog Ofcom for "heavily editing" the words of Islamic imams to give them more sinister meaning in Dispatches: Undercover Mosque.

After investigating, Ofcom rejected the complaints in a decision published last year.

Police had suggested they had considered taking action against Channel 4 before being told the prospect of conviction was unlikely.

Police spent around £14,000 on the investigation, which was initially looking at whether three of the individuals shown in the programme could be prosecuted for inciting terrorism or racial hatred. But they then announced offences may have been committed by Channel 4, specifically in stirring up racial hatred.

Police also claimed the programme, broadcast in January last year, undermined "community cohesion" and "feelings of public reassurance".

One speaker in the programme was shown glorying in the Taliban's murder of a British Muslim soldier in Afghanistan, saying the real hero was "one who separated his head from his shoulders".

Kevin Sutcliffe, deputy head of current affairs at Channel 4, said:"This is a total vindication of the programme team in exposing extreme views being preached in mainstream British mosques. The authorities should be doing all they can to encourage investigations like this, not attempting to publicly rubbish them for reasons they have never properly explained."