But the late-night deal, which followed marathon talks in Brussels, fails to achieve the overall cuts in spending set by the EU heads of government earlier this month.

UK Agriculture Minister Nick Brown and colleagues from Sweden, Italy and Denmark hailed the deal, but there was no unanimity on where the cuts in farm subsidies should fall.

"We have reached a qualified majority on the proposals and that means there is an agreement," Mr Brown told reporters.

The ministers have been trying on and off since 27 February to conclude an agreement on reforming spending on the European Union's farms.

They have agreed reforms to the EU's cereals, beef and dairy regimes, cutting internal prices and offering farmers higher direct aid payments.

It will take place in two stages, in 2000 and 2001, instead of the European Commission's proposal for a one-off reduction.

David Eades reports: "Victory for cherished farm reforms"

The approach of a summit of EU leaders in Berlin in two weeks time had increased the pressure for a deal on agriculture, which consumes almost half of EU spending.

European Farm Commissioner Franz Fischler was upbeat after the agreement saying the package "amounts to the most radical reform since the CAP was first established in the early 1960s".

Deal 'well short'

However the deal fell well short of the European Commission's original proposals, either delaying or watering down the plans. BBC Brussels Correspondent David Eades says that two major proposals have been dropped.

• A plan by Germany to make individual countries themselves pay some of their farmers subsidies
• a gradual annual cuts in direct payments to farmers

The final compromise agreement includes cutting support prices to beef farmers and cereal growers by 20% althugh this would be phased in, with cuts of 15% to some dairy sectors - though these would be delayed for another three years.

Brussels Correspondent David Eades: it falls short of what the EU wanted

The deal, setting the subsidy bill at about 40bn euros ($44bn) a year, was approved by almost all ministers, with only Portugal saying it could not support the compromise.

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The farm ministers are now expected to hand the ideas over for finance ministers to tackle next week, and failing that, to leave it to heads of government to settle as part of the complete overhaul of EU funding and spending at a special summit in Berlin later this month.

National Farmers' Union President Ben Gill: Sets us in the right direction

The National Farmer's Union President, Ben Gill, told BBC Radio 5Live he welcomed the deal but said there was a lot that still concerned him.

"At least we've got a settlement that sets us in the direction now that can move us towards more market orientation," he said.