Linda Reynolds sued Ms Higgins over a series of social media posts the ex-senator believed damaged her reputation.
The Western Australian Supreme Court last month found the posts were defamatory and awarded damages of $315,000 plus $26,109 interest to Ms Reynolds.
Ms Higgins was ordered to pay 80 per cent of Ms Reynolds' legal costs, which are yet to be determined, on Tuesday.
The judgement also revealed Ms Higgins offered to pay Ms Reynolds $200,000 as a contribution to her legal costs in 2024 in the days before the pair went to trial, with her parents to pick up the tab, but it was rejected.
The former political staffer's lawyers suggested the pair release a statement saying they had agreed to end their dispute and "put these matters behind them and move on".
"(Then) Senator Reynolds and Ms Higgins both appreciate that the current legal proceedings between them have caused significant additional distress and hurt," the statement said.
"They have reached a mutually agreed resolution that will end all their disputes on a strictly confidential basis."
The statement, if agreed to, would have also said Ms Reynolds "acknowledges that Ms Higgins genuinely believed that adequate support had not been provided to her by her employer following the events of 23 March 2019."
Ms Higgins also offered to pay $10,000 to charity and acknowledge the distress her social media posts had caused Ms Reynolds, along with the ex-defence minister's claim that she and her staff had provided appropriate support.
Ms Reynolds said in her cost application that it was not a reasonable settlement offer.
Justice Paul Tottle agreed.
Ms Higgins' social media posts were found to carry an array of imputations, including Ms Reynolds engaged in a campaign of harassment against Ms Higgins, mishandled her rape allegation, and engaged in questionable conduct during Bruce Lehrmann's aborted criminal trial for rape.
Ms Higgins alleged Lehrmann raped her in the senator's ministerial suite.
A Federal Court judge overseeing a defamation case launched by Lehrmann against Network Ten found Ms Higgins was, on the balance of probabilities, raped by Lehrmann in the office.
Lehrmann is appealing that finding.
He has always denied the rape allegation and his criminal trial was derailed by juror misconduct.
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