The Beady Eye singer threatened to sue Noel insisting that he missed out on the festival at Chelmsford in 2009 because of a bout of laryngitis.
But he has since dropped any legal action after Noel apologised during a webchat for the launch of his new single The Death Of You And Me.
'For the record, it is a fact that he was diagnosed with laryngitis and it is a fact that he had a doctor's note to prove it,' Noel said during a recorded fan chat with pal Matt Morgan.
'I'd just like to say that if he gets offended by my opinions on such things then I apologise.
'It's all getting a little silly and out of hand and it's not very cool.'
The Sun reports that Liam and Noel's mum Peggy was upset over the incident.
A source said: 'That was playing on his mind then he had a moment of realisation that Noel wasn't being vindictive - he was just being cheeky. It was an anger that had built up over two years because he was so angry Oasis was over.'
Liam claimed he was taking legal action because he wanted Oasis fans to 'know the truth'.
He said in a statement: 'I am used to being called all sorts of things by Noel and I have in the past said things about him. But what Noel has alleged this time went way beyond rock-and-roll banter and questioned my professionalism.
'I tried to resolve this amicably but have been left with no choice but legal action. All I want is an apology.'