Prosecutors demanded Mr O'Dwyer should be sent to the States under the controversial 2003 Extradition Act and Home Secretary Theresa May signed a warrant for his extradition at the start of the year. But after negotiations by Mr O'Dwyer's legal team, he has signed a 'deferred prosecution' agreement.
At the UK High Court yesterday a judge was told that Mr O'Dwyer was expected to complete the agreement in the next 14 days, pay a small sum in compensation and give undertakings not to infringe copyright laws again.
His extradition application is then expected to return to the High Court so it can formally be disposed of. Judge Sir John Thomas, president of the Queen's Bench Division, said: "It would be very nice for everyone if this was resolved happily before Christmas."
Sir John also said it was a "very satisfactory outcome".
Campaigners drew comparisons between the case of Mr O'Dwyer and Gary McKinnon, the computer hacker saved from extradition last month after a long Daily Mail campaign.
Like Mr O'Dwyer, Gary's supposed crimes - hacking into military computers, while looking for evidence of "little green men" - took place from the UK.
Mrs May has promised to introduce a test to establish whether a person involved in similar cases should be tried in the UK or US.
- DAILY MAIL