Roy Ngerng, 34, a former government employee, was found guilty in November 2014 of defaming Lee after accusing him in a blog of misappropriating state pension funds.
Ngerng's lawyer Eugene Thuraisingam told AFP that under an agreement with the prime minister, his client would pay Sg dollars 30,000 by Wednesday to cover the costs of an assessment hearing.
To pay the actual damages he would then fork out USD 100 a month for the next five years before the amount increases to USD 1,000 a month until the amount is paid, which would take a total of 17 years.
A source familiar with the case told AFP that Ngerng had initially asked to be let off the remainder after paying Sg dollars 36,000. But this was rejected by the prime minister, who agreed to the payment in instalments.
Ngerng's guilty verdict was the first such ruling in Singapore over a purely online article.
Singapore has consistently ranked highly in surveys as one of the world's least corrupt countries, but rights groups say its leaders have used financially ruinous defamation suits to silence critics and political opponents.
Ngerng initially offered Sg dollars 5,000 as compensation to Lee, who rejected the amount.
After being sued by the prime minister, Ngerng was fired from his government hospital job for administrative reasons which he did not contest.
He successfully raised more than Sg dollars 112,000 through crowdfunding but the cash ran out during his defence.
The local media in Singapore is tightly controlled, leaving bloggers and other online commentators as the strongest critics of the long-ruling People's Action Party.
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