Lord Patten has defended the BBC's £450,000 pay-off to former director general George Entwistle, saying it had been agreed it was "defensible" and "better than any other course of action".
The BBC Trust chairman appeared before the Commons Culture, Media and Sport Committee amid continuing anger over the award of a full year's salary to Mr Entwistle after completing just 54 days in the job.
But he told MPs the corporation had paid Mr Entwistle less than he originally wanted, and by doing a deal with him had avoided potentially paying out more in constructive dismissal and possibly unfair dismissal claims. Mr Entwistle was finally forced to quit after BBC2's Newsnight wrongly implicated Lord McAlpine in a child abuse scandal - leading to a £185,000 pay-out to the peer.
The then director general had been under fire for weeks over an apparently slow and unconvincing response to the Jimmy Savile abuse scandal and his decision to continue with tribute programmes to the late DJ last Christmas even though he had known Savile was the subject of an earlier Newsnight investigation.
There was incredulity among MPs when it emerged last week that Mr Entwistle insisted on a full 12 months' salary before quitting - even though he was contractually entitled to just half that amount. In addition, he received £35,000 for legal expenses and £10,000 for public relations as well as 12 months' private medical cover.
Lord Patten, who appeared before MPs alongside acting director general Tim Davie, justified the decision. He described how he had told Mr Entwistle: "We are not urging you to go but we are not urging you to stay."
Mr Entwistle had wanted to leave through a "consensual termination of his contract", but had insisted on leaving the corporation "on 12 months or more", Lord Patten said. But he said after discussions with lawyers it became clear to him that without doing a deal, the case could develop into one of constructive dismissal or unfair dismissal, ultimately costing even more.
He said: "£450,000 is one hell of a lot of money. The idea that I did not understand how politically difficult it would be suggests a degree of political innocence on my part which I have to tell you does not exist. But the options I had were absolutely clear.
"We either had to deal with it quickly there and then, broadly speaking on the terms of 12 months, though that was less than we were asking for, or we had to go to constructive dismissal and constructive dismissal would have landed us with exactly the same amount of money, plus almost certainly another £80,000 of unfair dismissal."
Lord Patten said that at every stage he was taking advice from lawyers Baker & McKenzie. He said the deal included private health care, Mr Entwistle's legal costs for "contracting out of his employment rights", as well as his legal fees for appearing in front of inquiries. Lord Patten said the corporation also agreed to provide assistance for dealing with the media for a three-month period, but had not yet been asked for any help.