Last year the Christian singer won a case against the BBC for its live coverage of a raid on his property in Sunningdale, Berkshire in 2014 when police were investigating an alleged historical sex offence.
The performer, who always denied any wrongdoing, was never arrested or charged. He described the last four years of his life as "murderous".
In July, the High Court awarded Sir Cliff £210,000 in damages after ruling that the corporation had infringed upon his privacy in a "serious and sensationalist way".
However, the singer has said he is still "substantially out of pocket", after spending around £4.5m to clear his name.
A spokesman for Sir Cliff released a statement saying: "Sir Cliff incurred these costs over a five-year period as a direct result of the actions of the BBC and South Yorkshire Police.
"He is of course glad that an agreement about costs has now been reached. Ultimately, however, Sir Cliff is substantially out of pocket (a seven figure sum), not least because there are costs that he has not sought to recover from the parties."
The BBC has paid a further £315,000 to South Yorkshire Police to cover their legal costs.
New legal precedents were established as a result of the case, to deter news outlets from naming individuals who are under investigation but have not yet been charged.
As a result of the events, Sir Cliff launched a campaign for an Anonymity Bill, to make it illegal to publicly name alleged perpetrators before charges have been brought against them.
At the time of writing the parliamentary petition has been signed by nearly 28,000 people.
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