Roy Ngerng, 34, a former government employee, forked out Sg$30,000 ($22,000) to pay the cost of a special hearing last July at which the libel damages were assessed.
He must pay another Sg$150,000 in actual damages over a 17-year period under a deal announced Monday.
He will pay Sg$100 a month for five years. The amount will then be increased to Sg$1,000 a month until the debt is fully paid.
Ngerng was in November 2014 found guilty of defaming Lee after accusing him in a blog of misappropriating state pension funds.
Shortly after the payment deal was struck on Monday, Ngerng made a crowdsourcing appeal on his blog for help to defray his legal costs.
He had managed to raise close to Sg$12,500 by Wednesday morning.
After being sued by the prime minister in 2014, Ngerng was fired from his government hospital job for administrative reasons which he did not contest.
He successfully raised more than Sg$112,000 through crowdfunding the same year but the cash ran out during his defence.
The local media in Singapore is tightly controlled, leaving bloggers and other online commentators as the strongest critics of the long-ruling People’s Action Party.
Singapore has consistently ranked highly in surveys as one of the world’s least corrupt countries. But rights groups say its leaders have used financially ruinous defamation suits to silence critics and political opponents.
Singaporean leaders maintain that the lawsuits are necessary to protect their reputations from unfounded allegations.
– AFP