The Canaries have ended the dispute with their former manager over the manner of his departure from Carrow Road in the summer, which was set to go to the courts
The news comes after claims and counter-claims from all three parties, principally about the financial terms of first the compensation entitled to Norwich for Villa's securing of Lambert's services, and then an alleged bonus to the Scot that had been unpaid after successfully keeping the side in the Premier League last season.
However, in a club statement released on the official club website, Norwich City have stated that the matter is concluded.
"Paul Lambert, Norwich City and Aston Villa have agreed settlement in respect of the dispute regarding Paul Lambert's departure from Norwich City," the statement read.
"Aston Villa will pay Norwich City the original amount as agreed in the contract between Paul Lambert and Norwich City, and Norwich City will pay Paul Lambert the bonus he was entitled to after completion of the 2011-12 season.
"This represents a final settlement of all claims and disputes between the parties. No further comment will be made."
Under new manager Chris Hughton, Norwich saw a 10-match unbeaten run ended at West Brom on Saturday but still lie 10th in the table, seven points ahead of Lambert's 16th-placed Aston Villa.