Merlin launched a legal challenge against the LBE owners last summer over claims that the attraction breached intellectual property rights and engaged in unlawful practices as part of an attempt to copy its London Dungeon attraction.

LBE, which was opened in 2008 by owners Lee and Danny Scriven, will now pay compensation to Merlin as well as the operator’s legal fees.

"We would never object to fair competition from attractions offering a distinct proposition to visitors," said Glenn Earlam, managing director of Merlin’s Midway Attractions division.

"However, the sort of activity undertaken by LBE was totally unacceptable and Merlin had no choice but to put a stop to their unlawful activity which was directly targeted at the London Dungeon."