A CBC News reporter in Whitehorse will not be forced to disclose her sources for an investigative report, under an agreement announced on Monday.

The Yukon Supreme Court confirmed on Monday that it agreed to the deal struck over the weekend by lawyers for the public broadcaster and the Yukon News.

The newspaper wanted CBC reporter Nancy Thomson to reveal her confidential sources used for an investigative radio series that aired in 2004.

"We were able to assist, I think, in identifying ways in which the appropriate facts could be put before the court without having to imperil Nancy Thomson or her sources," Fred Kozak, an Edmonton-based media lawyer representing the CBC, said outside court.

Thomson had spoken with 11 sources for her report on alcohol and prescription drug abuse in Watson Lake, a town of about 1,500 in southern Yukon.

Thomson reported at the time that Watson Lake's sole doctor was also the town's only pharmacist.

The Yukon News wrote an editorial that praised Thomson's series and made its own claims about the doctor, who then sued the newspaper for defamation.

The newspaper had wanted Thomson to disclose her sources as part of its defence in the defamation suit.

"It's very good," Thomson said outside court after the agreement was reached. "I mean, I would be hard-pressed to do my job at all if I was not able to protect sources," .

The Yukon News will have to pay the CBC's legal fees associated with the case, according to the agreement.