The Wall Street Journal confirms the story leaked last month (no pun intended!) that Apple has agreed to pay a total of $53m to 153,000 early iPhone and iPod customers denied warranty coverage when the liquid indicators fitted inside the devices.

A class-action lawsuit had alleged that the indicators fitted to the original iPhone, the iPhone 3G, iPhone 3GS as well as the first and second generation iPod Touches could be triggered by moisture and humidity in normal use, rather than an accident – the classic one being a phone dropped into a toilet …

In documents filed with the United States District Court for the Northern District of California Tuesday, class-action attorneys said the money from Apple would be placed in a fund to be shared by roughly 153,000 customers who had been denied warranty coverage under an Apple policy associated with handling water damage. The papers seek court approval of the proposed settlement.

Apple denied the claim made in the lawsuit, but has now offered to settle. The offer is equivalent to an average of $346 per affected customer.

The decision comes a month after Apple changed its warranty policies in China following attacks by State-run media.