The solicitor, Jack Rabinowicz, said he had a number of other bullying cases on his books and also had been approached by parents who say their children have lost out on educational opportunities because the school is failing and want to sue for negligence.

Sebastian Sharp, aged 20, accepted Pounds 30,000 in an out-of-court settlement involving Shene School, in south-west London. He claimed he had been subjected to bullying from the ages of 12 to 15 and had regularly been kicked, punched and tied up by other pupils. He said this treatment caused him to run away, five years ago, for four days causing a nationwide hunt.

Mr Sharp released a statement to the press saying: “I hope from this that other children will get justice and realise they are not alone. I took this to court only to make schools answerable.” In an interview with The Times, his parents said Sebastian had still not fully recovered from his treatment at school.

The school denied that it failed to protect Mr Sharp, denied liability and said it agreed the settlement simply to avoid an expensive court case. Simon Williams, the headteacher, said he had agreed with the insurers’ decision not to proceed in order to avoid the school being forced into he spotlight.

He said: “We would have been prepared to defend the case in court but I didn’t wish the school to be in the full glare of publicity for a four week trial and 11 members of staff have to give evidence. In the event Mr Sharp received the money and, because there was no confidentiality clause, was able to give his side of the story to the press.”

Alan Parker, education secretary of the Association of Metropolitan Authorities, said the case had not been helpful because it had not gone to court and therefore set no precedent. But he said he thought there was little to be gained by tax payers having to fund such cases of compensation.

Rowie Shaw, the National Association of Head Teachers’ director of professional services, said that she was worried that the case could encourage other parents to rush into litigation. She said: “It is a rather worrying trend that parents are being encouraged to sue by ambulance-chasing lawyers. On the matter of bullying, all schools now have a policy to combat it and most schools take it very seriously.”

Mr Rabinowicz said he did not predict an avalanche of bullying claims. He said: “You would have to prove the school knew about the bullying and did nothing to prevent it.” He said it was a pity that the case had not gone to court to enable the legal position to be clarified.

The House of Lords has ruled that while parents and pupils had no blanket right to sue local authorities for failing to cary out their statutory duties, individuals could claim damages where an LEA or employee owed pupils a direct duty of care.

Previous attempts by parents of children with special needs who believe that LEAs have failed to diagnose problems have so far failed to win redress in the courts.