The agreement establishes a code of conduct for the general election on 2 June and calls for a joint election rally to be addressed by the two party leaders, the ANC's Thabo Mbeki and Mangosuthu Buthelezi of the IFP.

Hundreds of ANC and Inkatha members danced and sang together outside Durban's City Hall where the two parties signed the agreement.

'Day of reconciliation'

IFP chairman Lionel Mtshali and ANC deputy president Jacob Zuma put their names to the deal.

IFP supporters rally in Thokoza - wracked by political violence before the 1994 vote

"It is a day of reconciliation," Mr Mtshali told the two parties' supporters in front of City Hall.

"It is hopefully a day marking the commencement of a process that in time will play itself out in the complete normalisation of relations between us."

Election observers said they hoped the agreement would help guarantee a peaceful ballot.

Bishop Michael Nuttall, chairman of the Electoral Code of Conduct Observer Commission, said: "It should make a difference on the ground because leaders are sending out an important message about tolerance.

"The fact that both parties in their rank and file are here makes it a significant moment in our political history," he added.

Strained relations

Relations between the two parties have long been strained, with more than 12,000 people killed in political violence between rival supporters since 1985. Further tension followed the discovery of a large Inkatha arms cache on Tuesday.

The two parties made a tentative peace in 1996, two years after the 1994 all-race election that swept the ANC into power nationally and gave the IFP a narrow majority in KwaZulu-Natal province and control of its provincial government.

Observers say the run-up to the June ballot has been remarkably free of the violence that preceded the 1994 vote when hundreds of people were killed each month.