Tamsin Allen, the Labour MP's lawyer, said that £100,000 of the settlement would be paid by NGN - a division of News International - directly to a charity of Jowell's choice.
Allen, of Bindmans LLP, also revealed that the settlement includes "an ongoing obligation to disclose documents" over how Jowell's phone was targeted and hacked.
"News Group has agreed to pay damages in the sum of £200,000, £100,000 of which will be paid directly to a charity which she has supported for some time," Allen said in a statement.
"The payment will be registered with the appropriate parliamentary authorities on receipt."
Allen said that Jowell will continue to co-operate with Operation Weeting, the Metropolitan Police investigation into phone hacking at the now defunct News of the World.
She will also continue to act as a "core participant" at the judge-led Leveson inquiry into press ethics and standards, which is currently under way in London.
"Her concern has always been to ensure a transparent investigation so that the truth about phone hacking should emerge in full and she is confident that will now happen," Allen added.
The £200,000 settlement, covering breach of privacy and harassment, was reached after police told Jowell that her mobile phone had been hacked "wholesale".
The agreement was finalised last week, and will be formalised by the Court shortly, said Bindmans.
It is thought that the phone of the former Olympics minister was targeted in 2006 when her estranged husband, David Mills, became the subject of headlines over his links to former Italian prime minister Silvio Berlusconi.
Speaking to The Independent, Jowell said: "I was very extensively hacked - 'wholesale', as it was put to me. It was quite clear it was wholesale as there were things no-one else should have known.
"It makes you feel like you're going mad. It made me feel like I couldn't trust anyone at the time."
Jowell's former Cabinet colleague David Blunkett has also accepted a "substantial" settlement for the hacking of his phone by the News of the World, but he refused to disclose the exact amount.
Today at the Leveson inquiry, two of the News of the World's most high profile former journalists mounted a passionate defence of their work and ethics while at the paper.
> News of the World accused of 'withholding evidence' in hacking probe