The Take That singer will become top earner on the ITV1 talent show with the staggering pay cheque - which is said to be three times more than the sum offered to N-Dubz star Tulisa Contostavlos to also take a seat on the panel.
A show source said: "Gary is not exactly a D-list celebrity so hiring him comes with a cost.
"With Cheryl and Simon out of the picture there was some decent cash to hire big names. But it's not about the money for him - he is genuinely interested in bringing on new talent."
Simon Cowell and Cheryl Cole have left 'X Factor' to judge on the US version of the show and singer Dannii Minogue will not be returning after she quit due to scheduling problems with her other programme 'Australia's Got Talent', leaving Louis Walsh as the only remaining original judge.
Dannii is expected to be replaced by Tulisa, who is thought to have been offered £500,000 to judge on the programme, and a friend said she is keen to tie up a deal.
Her pal told The Sun newspaper: "This is a dream come true for Tulisa. This will catapult her to a household name.
"She is being talked about as the new Cheryl."
The final judging position is yet to be filled, with Destiny's Child singer Kelly Rowland thought to be top of Simon's wanted list, although former panellist Sharon Osbourne is also rumoured to be in the frame.