A Yaphank couple who filed a federal lawsuit against the German-American Settlement League reached an agreement with the league on Friday.

The league will pay Philip Kneer and his wife, Patricia Flynn-Kneer, and Long Island Housing Services Inc. a total of $175,000 for damages and attorney fees, according to court papers.

The group also is to adopt new bylaws that won’t discriminate based on race or national origin, and will allow homeowners to publicly list and advertise their homes, court records show.

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The league denied all allegations of wrongdoing as part of the settlement.

Attorney Diane Houk, who represented the plaintiffs in the case, confirmed the case had been resolved.

Settlement League president Robert Kessler didn’t return phone calls seeking comment about the settlement.

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The Kneers’ October lawsuit in U.S. District Court in Central Islip claims that discriminatory covenant restrictions in the community prevented them from selling their home, court papers show. The league’s bylaws also required the Kneers to advertise the house through printed materials circulated only to league members, according to the lawsuit.

The Yaphank community, consisting of about 50 homes, was founded as a summer camp during the 1930s by adherents of Adolf Hitler to support the German Nazi Party several years before the outbreak of World War II. Some of the streets in the community were named for Hitler and other German leaders. The street names were changed after the war.

The suit said the Kneers, who bought their house in 1999, have tried unsuccessfully to sell it for six years. The league owns the land on which the homes were built.

Last month, New York State Attorney General Eric T. Schneiderman’s office began investigating if the league violated federal housing discrimination laws. The investigation is continuing.