DOZENS of families affected by the Edinburgh babies' ashes scandal could now sue for damages amid reports the council is set to settle a £75,000 lawsuit brought by a bereaved mother.

Madelaine Cave, 58, claimed she sustained psychological injury including nightmares and anxiety after finding out there were ashes following her daughter's cremation at Mortonhall Crematorium when she was told there would be none.

It had been her wish to scatter the ashes of her child Meghan – who died suddenly aged 15 days old in 1994 – at a favourite spot in the Lammermuir Hills in East Lothian.

She said she had been deprived of the opportunity to dispose of the baby's ashes in a way and at a place she wished and of going to that spot to grieve and remember Meghan.

The mother, formerly of North Berwick, in East Lothian, who moved to Colorado, in the USA, said the revelations and disclosures about the circumstances of her daughter's cremation caused post traumatic stress disorder. She was also suffering from a pain disorder.

In a court action against Edinburgh City Council she sued for £75,000 and said she will never know where her daughter's remains are nor how they were disposed of and this caused her significant injury and distress.

Lawyers acting for the mother wanted the damages action to be heard before a civil jury rather than a judge sitting alone.

But during a brief hearing at the Court of Session in Edinburgh Robert Milligan QC, representing the council, asked for the case to be continued.

The senior counsel told Lord Ericht: "I am pleased to say an agreement, at least in principle, has been reached to resolve the whole claim."

The suggestion the local authority was preparing to settle has raised the prospect that other claims may follow.

The council paid compensation of up to £4,000 to around 100 families affected by the scandal – in which crematorium staff told parents that no ashes from their young child could be collected because the new furnaces were so hot – which prohibited them from taking further legal action.

But it is thought around 80 families failed to accept the compensation award and would be eligible to lodge civil cases similar to Madelaine Cave.

Speaking about the development, Dorothy Maitland, the former leader of the charity which exposed the Mortonhall babies ashes scandal, said: "I know a lot of the parents felt that what they got was ridiculous, but they just didn't have the strength or the finance to fight it in case they lost.

"Others did refuse and if Madelaine's case is ultimately successful they may well come forward with their own claims."

And she added: "I accepted the compensation offer because money was not the be all and end all for me and I wasn't in a position to fight any further after the truth came out. At the end of the day I don’t think I could have gone through two years of this. The council has created a memorial garden for at Mortonhall and that is worth more than anything."

A spokesman for Edinburgh City Council would not comment on whether the full £75,000 would be paid.

He said: "It would be inappropriate to comment on an individual case."