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Libel action was taken by Harold Wilson after a postcard was published, promoting the group's new record Flowers in the Rain. It featured a caricature of the Labour Prime Minister in the nude.
Speaking for Mr Wilson, Quentin Hogg QC described the publication as making use of "malicious rumours" concerning his character and integrity.
As part of the libel settlement, the band and their manager Tony Secunda have agreed to devote all royalties from their record to charities of the Prime Minister's choice.
The defendants also included the card's artist, the advertising agency and printers. All have apologised for their involvement and have agreed to pay the costs of the proceedings estimated at £3,000.
Mr Hogg labelled the card "scurrilous" and criticised the decision to send it to journalists, television producers and music publishers.
Representing the group's manager, members and the artist, Richard Hartley said his clients wished to express their "profound regret" for what had happened.
Members of the Move did not arrive at the High Court in time for the proceedings, but appeared in high spirits. Asked about their political standpoint they joked:
"We've no faith in any political sides at all. We'd vote for people like Frank Zappa, Jimi Hendrix, you know."
The Move recorded and published Flowers in the Rain in August, and Mr Secunda circulated copies of the promotional postcard to coincide with the record's release.
But he denied the publication was a publicity stunt, suggesting the resultant libel action had created that impression.
"Wilson started legal proceedings, we did it as a cartoon, remember that. It wasn't intended to be anything but that," he said.
Worldwide sales of the record, of which an estimated 200,000 copies have already been sold, are expected to generate about £10,000 in proceeds.
Mr Wilson has nominated the Spastics Society and the Amenity Funds of Stoke Mandeville Hospital for the benefit of paraplegic patients to receive the royalties.
Mr Hogg concluded Harold Wilson had never intended to be "harsh or vindictive" and he warned that in any future incident Mr Wilson might not be so lenient.
The Move formed in 1966 in Birmingham. They had a number of hits including Flowers in the Rain, Blackberry Way and Fire Brigade.
Flowers in the Rain went on to become the first single ever played on BBC Radio1.
Tony Secunda was their first manager, known in the industry as one of the more controversial pop promoters. He encouraged wild stage acts including smashing up TV sets and effigies of political figures.
The libel action ultimately ended the Secunda relationship and the band moved on to new management.
Some of the band's members went on to form the Electric Light Orchestra (ELO) and now ELO2.
Proceeds from Flowers in the Rain continue to go to charity.
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