In pictures: Inca treasures

Peru demanded the artefacts back last year, saying it agreed to their removal on condition they would be returned.

More than 4,000 pieces, including mummies, ceramics and bones were taken to the US university.

Under the agreement Yale and Peru will co-sponsor the first travelling expedition of the collection.

Months of negotiations

Yale will also act as an adviser for a new museum in the Andean city of Cuzco, close to Machu Picchu, where the exhibition will be installed after its tour.

The museum's opening is planned to coincide with the centennial celebration of Bingham's rediscovery of Machu Picchu in 1911.

BINGHAM'S LEGACY 1911: Hiram Bingham III and a small group of guides stumble upon the fortress of Machu Picchu 1912-1915: Bingham leads three expeditions back to the site 2003: Yale launches a major touring exhibition featuring the artefacts - the Peruvian government starts negotiations to get them back 2006: Peru threatens to take Yale to court Sept 2007: Yale agrees to return Machu Picchu artefacts to Peru

During three trips to Machu Picchu, Bingham dug up thousands of objects, including silver statues, jewellery, musical instruments and human bones.

The agreement between Peru and the Connecticut-based university came after months of negotiations.

Initial talks broke down last year under the administration of former Peruvian President Alejandro Toledo and Peru threatened to take its case before a US court.

Yale had offered to divide the items up but it now acknowledges Peru's title to all the excavated objects.

It has been agreed that some of the pieces will remain at the university temporarily for research.

Yale will also help establish a programme of scholarly exchanges that will continue for at least three years.

Some of the artefacts will be displayed in a travelling exhibition

"We aim to create a new model for resolving competing interests in cultural property," Yale's president, Richard C Levin, said.

"This can best be achieved by building a collaborative relationship - one which involves scholars and researchers from Yale and Peru - that serves science and human understanding," he said.

The ruins at Machu Picchu, high in the Andes mountains, are Peru's most popular tourist attraction.