UPDATE 1-Uber reaches settlement with family of autonomous vehicle victim

(Adds attorney's comment, detail, background)

TEMPE, Ariz., March 28 (Reuters) - The family of the woman killed by an Uber Technologies Inc self-driving vehicle in Arizona has reached a settlement with the ride services company, ending a potential legal battle over the first fatality caused by an autonomous vehicle.

Cristina Perez Hesano, attorney with the firm of Bellah Perez in Glendale, Arizona, said "the matter has been resolved" between Uber and daughter and husband of Elaine Herzberg, 49, who died after being hit by an Uber self-driving SUV in the Phoenix suburb of Tempe earlier this month.

Terms of the settlement were not given. The law firm representing them said that Herzberg's daughter and husband, whose names were not disclosed, will have no further comment on the matter as they consider it resolved.

Fall-out from the accident could stall the development and testing of self-driving vehicles, which are designed to eventually perform far better than human drivers and sharply reduce the number of motor vehicle fatalities that occur each year.

Uber and microchip developer Nvidia Corp have put self-driving car testing programs on hold following the fatality, which is believed to be the first death of a pedestrian struck by a self-driving vehicle.

The fatality also presents an unprecedented liability challenge because self-driving vehicles, which are still in the development stage, involve a complex system of hardware and software often made by outside suppliers.

Herzberg was jay-walking across a divided four-lane road with her bicycle when she was struck. A video taken from a dash-mounted camera inside the vehicle that was released by Tempe police showed the SUV traveling along a dark street when suddenly the headlights illuminated Herzberg in front of the SUV.

Other footage showed the human driver who was behind the wheel mostly looking down and not at the road in the seconds before the accident. (Writing by Peter Henderson; Editing by Jacqueline Wong)