Honduras' de facto government buckled under international pressure and agreed to allow the return to power of President Manuel Zelaya, who was toppled in a military coup four months ago, Reuters reported.
The breakthrough late on Thursday followed renewed pressure from senior U.S. officials who traveled to Honduras this week for a last-ditch effort to end a crisis that had handed U.S. President Barack Obama a foreign policy headache.
"It is a triumph for Honduran democracy," the leftist Zelaya said after the rival sides agreed to a deal that could see him restored to office in the coming days.
"We are satisfied. We are optimistic that my restitution is imminent," Zelaya said.
Zelaya, a leftist, was toppled and sent into exile on June 28 but crept back into Honduras last month and has since been holed up in the Brazilian embassy.
De facto leader Roberto Micheletti, who took over the country within hours of Zelaya's ouster, had repeatedly refused to agree for his return but finally backed down.
"I have authorized my negotiating team to sign a deal that marks the beginning of the end of the country's political situation," Micheletti, who took over as de facto leader after the coup, told a news conference on Thursday night.
He said Zelaya could return to office after a vote in Congress that would be authorized by the country's Supreme Court. He said the deal would require both sides to recognize the result of a November 29 presidential election and would transfer control of the army to the top electoral court.
Micheletti said the deal would create a truth commission to investigate the events of the last few months, and would ask the international community to reverse punitive measures like suspended aid and canceled visas.