A MELBOURNE woman has won compensation from a hospital, which allegedly failed to warn her that an abortion could harm her mental health.

"Ellen", a mother of two, created legal history when the Royal Women’s Hospital agreed to pay the compensation.

She will also receive an undisclosed amount from a Melbourne gynaecologist who procured the abortion in 1990 which she has alleged triggered severe depression.

The case, believed to be the first In Victoria, was settled, out of court last week with the final agreement due to be signed today.

Ellen’s barrister, Mr Charles Francis, QC, said the case could encourage hundreds of other women to sue for poor counselling over their abortions.

In her statement, Ellen alleged she was never adequately warned that her abortion could damage her mental health.

A trainee social worker at the hospital gave her a standard Pregnancy Advisory Service pamphlet, which claimed there was not "any evidence to suggest that women who have had a termination suffer from any long-term psychological effects".

But Ellen’s statement of claim alleged her abortion plunged her into grief and deep depression, forcing her husband to give up work to nurse her.

She later gave birth to another child and said she saw in his face the child she never had.

A spokeswoman for the Royal Women’s Hospital said she could not discuss the case, but said that the hospital had not changed its method of counselling women.

Most women refused counselling before an abortion because they had already made up their minds to go ahead, she said.