The Roman Catholic Church in Los Angeles is to pay $1.3 million (£640,000) to each of about 500 alleged victims of sexual abuse dating back to the 1940s in the largest compensation deal of its kind.

The $660 million settlement, announced by the victims’ lawyers, finally resolves accusations against 221 Los Angeles priests, brothers, lay teachers and other Church staff.

It came 48 hours before a case was scheduled to go to trial in Los Angeles Superior Court involving 12 people who accused Clinton Hagenbach, a former priest, of molesting them.

Although Hagenbach died 20 years ago, the trial would have meant the Archbishop of Los Angeles, Cardinal Roger Mahony, having to testify about the Church’s response to abuse cases dating back 70 years.

Last night the cardinal apologised to all those affected. “There really is no way to go back and give them that innocence that was taken from them. The one thing I wish I could give the victims . . . I cannot,” he said.

Cardinal Mahony has already faced criticism for sending a priest to New Mexico for “treatment” after he confessed to abusing young boys, instead of calling the police. The priest, Michael Baker, allegedly went on to molest other children. Cardinal Mahony has described it as the case “that troubles me the most”, but has long fought to keep the Church’s personnel files confidential.

Raymond Boucher, the lawyer representing the alleged victims, said that some had waited more than five decades for a chance at reconciliation and resolution. “This is a down-payment on that debt long overdue,” he told the Los Angeles Times.

Cardinal Mahoney said that the Church would have to sell property and borrow money to meet the settlement, the latest in a long series of deals resulting from abuse allegations that began to emerge in the 1990s. The US Catholic Church has paid more than $2 billion in settlements.

The monetary payments are a result of the criminal statute of limitations having long expired in most abuse cases, leaving a civil lawsuit as the only option. Any settlement deal will have to be approved today by Haley Fromholz, the Superior Court judge.

David Clohessy, national director of the Survivors Network of those Abused by Priests, said that the deal was the largest group settlement with the Catholic Church, although a handful of individual plaintiffs have received greater amounts than each is to receive from this settlement.

One alleged victim, Mary Ferrell, 59, said: “That amount of money is impressive in that it shows tremendous guilt. But I would give it back if I could have my childhood back.”