DuPont Co. agreed yesterday to pay as much as $343 million to settle a class-action lawsuit that accused the chemical company of contaminating drinking water supplies in Ohio and West Virginia with a processing agent used to make Teflon.

The agreement, which still must be approved by a circuit court judge, stems from a class-action lawsuit filed in 2001 on behalf of roughly 50,000 residents. The suit charged that residents suffered adverse health effects as a result of the chemical known as C-8, or perfluorooctanoate, getting into drinking water near the company's Parkersburg, W.Va., plant.

As part of the settlement, DuPont agreed to pay $85 million directly to the residents, mostly in cash, as well as $22.6 million in attorneys' fees. The company also agreed to set up an independent scientific panel to study possible links between exposure to C-8 and any health problems, including birth defects.

In the 1980s, DuPont's supplier, 3M, conducted an animal study that linked C-8 to birth defects in animals, and other animal studies suggested the chemical could cause cancer. As a result, DuPont transferred female line workers to other positions, but it later concluded that the study was invalid and brought female employees back to the processing area.

If the scientific study, which is expected to cost $5 million, concludes that there is a probable link between C-8 and human disease, DuPont will fund a medical monitoring program for up to $235 million to test local residents.

Under the settlement, the company is also providing six water districts in the two states with water-treatment systems to reduce the level of C-8 contamination.

In a statement, DuPont general counsel Stacey J. Mobley said the settlement did not imply the company was admitting any liability.

"After two years of discussions, we are pleased to reach an agreement that places our combined priorities where they belong -- on the community and not on lengthy and contentious legal proceedings," Mobley said.

DuPont spokesman Clif Webb said the company settled the case despite its confidence it could win on scientific grounds.

Members of the class-action suit said they were pleased that DuPont was taking immediate steps to clean up the area's water.

"On the face of it, it's good news, since what we've wanted all along was to have water without C-8," said Bob Griffin, general manager of Ohio's Little Hocking Water Association.

The Environmental Protection Agency is seeking millions in fines from DuPont on the grounds that the company failed for two decades to report possible health and environmental problems linked to C-8. DuPont is fighting the charges through an administrative process, arguing it reported everything that was required.