Prime Minister Theresa May and the European Commission’s President Jean-Claude Juncker appeared at a joint press conference to announce that the parties had come to a deal.
This opens the door for the respective negotiating teams to begin talks on future trade arrangements.
The hastily-arranged briefing in Brussels follows a night of frantic talks.
In recent weeks, arrangements in Northern Ireland had proved a sticking point. It had originally been thought that a deal was close to being announced a few days ago, but Mrs May was forced to step back at the last minute after the Democratic Unionist Party (DUP) made clear that the terms were unacceptable.
A fresh round of bargaining over the past few days appears to have broken the impasse and the Prime Minister flew to Europe in the early hours once it became clear that the parties had reached an accord.
Mrs May said: “Getting to this point has required give and take on both sides. And I believe that the joint report being published is in the best interests of the whole of the UK.
“I very much welcome the prospect of moving ahead to the next phase, to talk about trade and security and to discuss the positive and ambitious future relationship that is in all of our interests.”
Mr Juncker said the parties had finally made “the breakthrough” that was needed.
“Today’s result is of course a compromise,” he said. “It is the result of a long and intense discussion between the commission negotiators and those of the UK. As in any negotiation, both sides have to listen to each other, adjust their position and show a willingness to compromise.”
The announcement will lift some of the pressure on the Government, who will be acutely aware that the date of Britain’s departure is beginning to bear down. The fear of many in the business community is that the negotiating team could walk away without a deal in place, although those concerns may have receded somewhat now that the ground has been laid for the start of trade talks.