More than three years after the organ storage scandal at Alder Hey hospital, Liverpool, parents of the dead children stripped of body parts have been offered compensation of £5,000 each.

An out-of-court settlement totalling £5m has been agreed by the parties' lawyers, with sums allocated to parents involved. Any remaining money will go into a trust fund for traumatised families. The hospital is also to pay legal fees of parents accepting the offer.

It is considered a "realistic settlement" by lawyers for the claimants, although reaction from parents was mixed.

A confidentiality agreement covers the offer, but one parent told the Liverpool Daily Post: "It's a complete insult." However, another said: "It's a fair settlement. We were never after the compensation. The issue was changing the law."

More than 1,000 made the claim. Many sought "non-financial remedies", which have also been offered by the hospital in the package - a public apology in front of a minister and representatives of Liverpool University and Alder Hey, letters of apology to all parents, a plaque at the hospital stressing "organs were wrongly retained in former times", and a big donation by Liverpool University to nominated charities.

Consultations into the aftermath go on. The Department for Health is hosting a meeting today to discuss changes in the law regarding organ retention. A review of the coroner system is also in place.