An ex-Over Wallop postmistress is set to receive compensation of up to £100,000 after her fraud conviction was quashed following a Post Office scandal.

Julie Cleife was wrongfully accused of stealing £25,000 from the Post Office and was given 100 hours community service, and forced to pay costs. However, the Post Office later admitted that it knew the software behind its computer terminals, Horizon, was prone to errors that caused money to apparently disappear from accounts.

The government will now fund interim compensation of up to £100,000 for each subpostmaster affected by the scandal while full settlements for their “immense hardship” are agreed. The Post Office is contacting postmasters and will aim to make an offer for an interim payment within 28 days of receiving an application from those whose overturned convictions relied on Horizon evidence.

Postal Affairs minister Paul Scully said: “The suffering and distress these postmasters and their families have gone through cannot be overstated.

“While nothing will make up for the years of pain they faced after this appalling injustice, I hope this initial step provides a measure of comfort.

“The Post Office has started to turn a corner in terms of dealing with its past mistakes – and this Government will support them in doing so wherever possible.”

64-year-old Julie moved to Over Wallop with her family in the 1990s, where she ran the post office. She said that she noticed money wasn’t adding up, but the Post Office helpline did not reveal the issues with the Horizon software.

“There was a lot of stress and worry. I knew I wasn’t taking it but I didn’t know where it was going,” she said.

She was accused of stealing from the post office, along with hundreds of others across the country, based solely on the evidence of Horizon. The grandmother was sentenced for the offence at Winchester Crown Court in 2010, and found it difficult to get work afterwards.

“I had a mortgage to pay and a criminal record. I applied for hundreds of jobs and couldn’t get anywhere,” she said.

Julie had put the events behind her, but was convinced to join the appeal against the sentences, of which 57 have now been acquitted, with hundreds of others expected to apply to have their convictions quashed.

“I was persuaded by friends and family to join the group who were appealing their convictions and I am glad I did,” she said.

“It has been difficult but to be honest, I have been very lucky in the village. People have been very supportive.”

Neil Hudgell, who represented Julie and many of the other victims of wrongful convictions due to Horizon, said: “The dialogue we have been having with legal representatives instructed by the Post Office has been very positive to this date and there appears to be good intentions.

“This cautiously positive step is to be welcomed and suggests, hopefully, that the Post Office is now intending to do right by the many people it has harmed so badly.

“This cannot be a delaying gesture though. This is money to which these clients are entitled. With regards to how final settlements are agreed, we want them to come to the table and be meaningful in what they put forward.

“We don’t want to see any legal gymnastics, game playing or delaying tactics. We want to see words very quickly translate into actions, and hopefully this is a positive start that will ease some of the pressures our clients are facing.”