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The BBC reports that the 33-year-old, who also goes by the name Kyle Bradford, will not contest the defamation lawsuit put forward by Cruise.
Cruise unleashed his lawyers after the French gossip magazine Acustar printed an interview with Slater claiming he had a homosexual relationship with Cruise, and that was the real reason for his breakup with actress Nicole Kidman.
Acustar has since printed a retraction of the story, while Slater says he never spoke to the magazine. He added that he won't "feed into this media circus" and wants to spare his parents any further grief.
"If (Cruise's lawyers) persist, they will get a judgment against me for $100 million. Then I file bankruptcy and it's dismissed," Slater told the BBC.
"They exposed me and my whole personal life by doing this to me. It's like I'm being harassed by the celebrity ... I don't think I ever want to see another Tom Cruise movie in my life."
If Slater thought this would de-escalate tensions with Cruise, he apparently was mistaken.
The New York Post reports that Cruise has expanded his lawsuit, and is now going after Slater's ex-wife Kristina Ann Kirstin, who sold her story to the National Enquirer.
The post said Kristin's lawyers have admitted that the Enquirer paid for an interview, but she said she only responded to their inquiries after Cruise drew attention to the controversy with his lawsuit.