Simmons, the head of influential rap label Def Jam, reached a settlement with the soft drink company he had accused of prejudice for pulling an advert with black rapper Ludacris.

Simmons said the campaign had been pulled for offensive language and replaced by Ozzy Osbourne's family, notorious for their swearing in reality show The Osbournes.

Rap mogul Russell Simmons is a powerful figure

The agreement calls for Pepsi to donate at least £1m a year over three years to charities chosen by Pepsi, the Ludacris Foundation and the Hip-Hop Summit Action Network, co-founded by Simmons.

But Pepsi met Simmons on only some of his conditions.

He had called for Pepsi to pay £5m in charitable contributions, issue a public apology to Ludacris and the hip-hop community and reinstate the rapper in the ad campaign.

Pepsi has said reinstating the ad was not part of the deal.

Ludacris is a huge star in the US

The row began when Fox News commentator Bill O'Reilly, known for his outspoken views, criticised Pepsi for featuring Ludacris.

Pepsi then pulled the 30-second spot, saying it had received complaints about Ludacris's lyrics.

Atlanta-based Ludacris, one of the biggest names in hip-hop's Dirty South movement, has earned a reputation for his explicit lyrics.

Ludacris appears on Def Jam, the record label Simmons co-founded.

A Pepsi spokesman said the company had regretted the Ludacris controversy.

"It was our mistake, we learned a lot from it and we've moved on," the spokesman said.

"We respect Russell's interest in bringing hip-hop talent to a larger audience and we have worked together to do just that," he added.