The social media giant agreed with 52 US states and territories yesterday to settle a lawsuit alleging that it had harmed children for years while concealing the risks posed by its platforms.

The UK government said it was monitoring developments closely as it moves towards a ban on under-16s using social media, raising the prospect that Meta could be required to introduce similar measures in Britain.

The US lawsuit has been described as social media’s “Big Tobacco” moment. Under the settlement, teenagers in most of the US will be unable to access Facebook and Instagram between midnight and 6am, while notifications will be silenced between 8am and 3pm.

They will also face a two-hour daily limit, receive regular warnings about excessive use and be subject to stricter age checks. Teenagers will no longer be able to see how many likes their posts, or other people’s posts, have received, while the platforms will ban “extreme makeup” filters for teenagers.

William Tong, Connecticut’s attorney general and one of the prosecutors who pursued Meta, said: “Meta strip-mined the souls of America’s children for maximum profit with abusive and addictive features that unleashed a youth mental health catastrophe. That ends now.”

Lawyers for the states had told the court that Meta’s business model was to “hook the users [and] hide the truth” about the damage caused by its apps. Meta, which denied wrongdoing as part of the agreement, has agreed to pay $18bn to the states, which had been seeking $200bn in damages.

The settlement consists of $16.7bn in payments to the states, a further payment connected to the Cambridge Analytica privacy scandal and a separate $1bn fine paid to Texas.

Of the total, $5.3bn will only be paid if Meta’s main rivals YouTube and TikTok agree to introduce similar safety measures and pay their own fines worth a combined $5.3bn. The unusual structure is intended to ensure Meta’s rivals face equivalent restrictions.

The settlement will last for 10 years and covers 47 states, the District of Columbia and the territories of American Samoa, the Northern Mariana Islands and Puerto Rico.

CJ Mahoney, Meta’s chief legal officer, said: “The framework we’ve negotiated will empower parents to easily manage how their children access our platforms.”

The settlement means Mark Zuckerberg, Meta’s chief executive, will not have to give evidence. He had been due to testify in the case in the coming days.

Adam Mosseri, the head of Instagram, defended the company’s actions on Tuesday, saying it had built features intended to limit usage of the app, but that teenagers “didn’t want” to use them.

Shares in Meta, which attempted to halt the trial this month, initially rose by 4.5 per cent after the settlement was announced, but later traded about 1.4 per cent higher.

The maximum amount Meta could have paid if it had lost the case was $1.4tn, according to the company’s own estimates, which would have been close to its entire value.