Miss California USA officials last month (Oct09) dropped a lawsuit against Prejean which demanded she reimburse them the $5,200 (£3,250) they loaned her for a boob job.

In exchange, the 22 year old threw out her suit accusing the organisation of violating her privacy by discussing the breast augmentation.

Pageant Director Keith Lewis says in a statement, "Carrie Prejean, Keith Lewis, and K2 productions have dropped their claim against each other and wish each other the best in their future endeavours. We are moving forward from the past."

Pageant owner Donald Trump dethroned Prejean in June (09) after the beauty queen violated her contractual obligations by failing to make public appearances.

The blonde first hit the headlines after speaking out against same-sex marriage onstage at the Miss USA pageant in April (09) - a move many believe cost her the crown.