Mr Schroeder put pressure on his allies to accept the deal

Under the deal, such workers from non-EU states will be able to emigrate to Germany for the first time in decades.

Mr Schroeder put pressure on his Green coalition partners to accept demands for safeguards on security from the opposition Christian Democrats (CDU).

The deal ends years of unsuccessful cross-party talks on the issue.

Business pressure

Mr Schroeder needs CDU support for the new laws because the opposition controls the German parliament's upper house.

He said: "I'm delighted. The compromise was reached with support from our coalition partners. We are going to have a modern immigration law."

German business leaders have been urging the parties to reach a deal, arguing that skilled workers are in short supply in the country.

But immigration is a hot political topic in Germany, where unemployment currently affects 4.4 million.

Opposition leader Angela Merkel said: "It is now worthwhile to work together on the final details of a draft of the legislation."