Phillips Petroleum Co. today reached a settlement with New York financier Carl C. Icahn that ends his attempts to take over the company and brings to a conclusion a three-month siege of the nation's eighth-largest oil company by Wall Street speculators.

Icahn agreed to end his $8.5 billion attempt to buy out Phillips after the company put forth a new offer to shareholders that Phillips officials valued at $56 or $57 a share, slightly more than Icahn was offering. The new plan replaced a controversial recapitalization program, opposed by Icahn, that Phillips said Sunday had been defeated by a shareholder vote.

Under its new offer to shareholders, Phillips will swap $4.5 billion worth of debt securities for half of its stock, as well as offer other inducements.

The plan would leave the company heavily in debt, but it also contains a provision that would make another attempt to take over the company very difficult. Under the plan, anyone wishing to take over the company and sell Phillips' assets to raise funds to finance the buyout, would be blocked by a clause requiring that all previous Phillips debts be paid off before any of the company's assets are used as collateral.

Icahn would not say if he would sell his shares back to Phillips, but he said he "would not oppose" the company's plan. Should he sell his shares, Icahn will turn a profit of between $75 million and $85 million on his investment in 7.5 million Phillips shares.

Phillips also agreed to pay $25 million to Icahn to reimburse him for the costs of his challenge to the company. Icahn and the company will drop all legal actions against each other, and Icahn has agreed to not try again to take over Phillips for eight years.

Phillips Chairman William C. Douce denied that the payment to Icahn constituted corporate "greenmail" to rid Phillips of a pesky investor, and he said the new offer to shareholders perhaps should have been made earlier.

"We are presenting our shareholders with a new opportunity," Douce said at a press conference following presentation of the plan today at a shareholders meeting. "We were trying to protect the interests of the shareholders and get the best answer that would improve the value of their holdings."

Douce said negotiations with Icahn over a settlement had begun as soon as Phillips made the new offer to stockholders, and that Phillips had been given indications last week that Icahn would be amenable to a higher price from the company. "We did improve the deal for the shareholders," Douce said. "When this was presented to Mr. Icahn, he agreed that we had made substantial improvement."

The agreement with Icahn came three months to the day after Mesa Petroleum Co. Chairman T. Boone Pickens Jr. put Phillips "into play" by making an offer to take control of the company. Pickens argued that Phillips stock was trading at a market price far below its theoretical value, and said shareholders should receive more through a buyout of their stock.

Phillips later made peace with Pickens in the form of a controversial program to recapitalize the company, which Phillips officials hoped would buoy stockholder values. But Icahn, charging that Phillips had overestimated the value of the plan to shareholders, led opposition to the recapitalization and mounted his own takeover bid.

Phillips conceded Sunday evening that shareholders had defeated the recapitalization proposal, and Douce said today that, although holders of 57 percent of the 120 million shares voting had approved the plan, the vote still fell short of the simple majority of Phillips' 154.6 million shares needed for approval.

When it announced that the plan had been defeated, Phillips also unveiled its new plan to refinance the company by offering to purchase about half of its stock for debt securities with a face value of $62 a share. Those purchases, which did not need formal approval from shareholders, began today.

In addition, Phillips said it would increase its dividend and ask shareholder approval of a dividend of $4.10 in preferred stock for each Phillips share, as well as for a 3-for-1 stock split -- all in the name of increasing shareholder value.

Some stock market analysts valued the new package at between $52 and $57 a share -- somewhat better than the $53-a-share price Phillips had put on the recapitalization plan.

Icahn and many Wall Street experts had argued that that plan was worth substantially less. Icahn's own offer, which had been conditioned on defeat of the recapitalization proposal, was worth $60 a share for half of Phillips stock and $50 a share for the rest -- an average of $55.

Phillips stock closed on the New York Stock Exchange today at $50.125, up 75 cents, and was one of the day's most actively traded issues, with 8.77 million shares changing hands.

One similarity between the two proposals, however, is Phillips' plan to sell $2 billion worth of as-yet-undetermined assets to help pay for the stock repurchase.

Today's peace agreement left hanging one small piece of business left over from Pickens' run at Phillips: the disposition of the 8.9 million Phillips shares held by Pickens' group. Under the recapitalization proposal, Pickens was to have sold his shares back to the company for $53 a share in cash, a move that was widely regarded as "greenmail" because Pickens would get a price different from other shareholders, whose $53 a share would have come in a disputed package of securities.

Phillips said today that Pickens still could exercise the $53-a-share offer, but the company indicated that the Texas oilman also could take the new offer if he wishes. A spokesman for Pickens said no decision had yet been made.