A public swimming pool in the Isle of Man has paid a woman £2,000 after she was asked to leave the water while breastfeeding.

Victoria Hodgson received the out-of-court settlement following a two-year battle over the incident in the Western Pool in Peel in 2014.

The details are disputed, but she claims she was “humiliated” when asked to get out of the water after discreetly breastfeeding her then four-month-old daughter, Amelia, on a step on the central island of the baby pool.

The 33-year-old told the Mail on Sunday that the manager asked her husband, Steve, to get her to stop “doing that”, describing it as an “indecency and nudity issue” which was “causing offence to some of the younger lifeguards”.

The couple and their four children returned to the pool the following week and Hodgson claims she was again asked to stop breastfeeding Amelia.

She decided to bring legal action against the pool, arguing staff had contravened her legal right to breastfeed in public areas without discrimination. Both the Breastfeeding Act in the Isle of Man and the Equalities Act in England safeguard this right.

A spokesman for the pool confirmed that Hodgson had been paid £2,000 earlier this year. Adrian Christian, the pool board chairman, said the settlement was made on legal advice that even if she lost, legal costs would exceed any compensation likely to be ordered by a judge. He added: “It was commercially sensible.”

But he disputed Hodgson’s account of events. He said the reason she was asked not to feed in the pool was that staff feared she could not adequately supervise her other small children in the water at the same time.

“They had four children with them, all under eight, including the breastfed one. The pool’s policy on ratio of child-to-adult for safety reasons is two to one – one parent can care for two children,” he said.

“The lifeguard at the time thought Mrs Hodgson wouldn’t have been able to safely look after the second child whilst breastfeeding the other child, so she was asked to come out of the water and take her child out of the water while she breastfed. There’s a seating area within 3ft of the pool. She was offered that we would be able to get a towel for her if she was cold.”

He alleged that Hodgson then quoted the Breastfeeding Act and told staff how much compensation she could apply for.

Christian confirmed the pool had spent £700 on an external health and safety report assessing Hodgson’s claim. The report, shared with the Guardian, said that while a woman had a right by law to breastfeed in the pool, an infant may regurgitate the milk and be sick in the pool, presenting an “unacceptable level of risk” by harming other “bathers’ psychological wellbeing”.

The report also said: “It is foreseeable that the attention of a pool lifeguard could be diverted from a bather experiencing difficulty in the water due to being temporarily distracted by having to deal with other bathers’ concerns at the given point in time. This raises the possibility of the swimming pool management being held vicariously liable with regards to an employer being held responsible for unsafe acts and omissions committed by an employee in the workplace.”

Hodgson could not be reached for an interview on Sunday. But she told the Mail on Sunday: “When it first happened, I was tearful and embarrassed. I felt sick with nerves. But the pool board have acted terribly, at every stage.

“I felt bullied and ridiculed all the way through when, ultimately, I’m just a breastfeeding mother standing up for a right given to me by statute.”

The swimming pool’s new breastfeeding policy makes clear that women are welcome to breastfeed in the cafe, changing village and spectators’ area. If staff see women feeding in the water, they are instructed to “explain politely that following a risk assessment in the pool and within the pool surround this is not permitted but that alternative areas are available”.

Earlier this month, it was reported that another mother was suing a leisure centre in Lancashire for £20,000 after being asked not to breastfeed her baby in a swimming pool while the wave machine was on.

The Sun reported that lifeguards saw Abbie Stocker feeding eight-month-old Eric in the water at Pendle Wavelengths in Nelson, Lancashire.