Guy Chapman, 37, and wife Denise, 50, travelled to the four-star Sierra Resort in Sharm el-Sheikh in June 2013 for what should have been a fortnight of sun, sea and relaxation.
But instead the Birmingham couple were hit by gastric illness after eating in resort restaurants and spent much of their holiday confined to their room with sickness.
Their symptoms continued after they arrived home and they instructed Birmingham law firm Irwin Mitchell to take legal action against Thomas Cook.
Despite no admission of liability being made, the holiday company has now paid out £12,000 to the Chapmans, who had paid £1,800 for the honeymoon.
Mr Chapman, an engineer, said: 'We were looking forward to this holiday for a long time and were excited to be celebrating our honeymoon and also my 35th birthday.
'The illness severely impacted our enjoyment of the holiday and every time we look back on it, all we have are terrible memories.'
'We ate in the restaurants at the resort but were extremely disappointed. On occasions we noticed the chicken sometimes was being served pink on the inside and some food did not feel hot enough.'
Nichola Blackburn, from Irwin Mitchell, said: 'This couple suffered terrible symptoms while staying at the Sierra Resort, including stomach cramps, diarrhoea and vomiting, on what was supposed to be a relaxing and luxurious holiday.
'Guy and Denise are extremely relieved that they have now received a settlement from the tour operator, which they placed their trust in when booking this holiday.'
A Thomas Cook spokesman said: 'We know how important holidays are to our customers and how upsetting it can be when they fall unwell while overseas. We have been liaising closely with Mr and Mrs Chapman's appointed solicitor and are pleased to have reached an agreement with them to amicably resolve this matter.'
According to their website, the resort boasts seven pools, a private beach and a buffet-style restaurant called Akuna Matata - which means 'no worries' in Swahili.
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