The Hungarian parliament held a special session on Friday, addressed by German Chancellor Gerhard Schr�der and his Austrian counterpart Viktor Klima.

The BBC's Nick Thorpe in Budapest: "Mr Schroeder thanked Hungarians for their role in freeing Eastern Europe"

At midnight on 10 September 1989, tens of thousands of East Germans who had poured into Hungary as so-called tourists, were allowed over the border into Austria and the West without visas.

The Berlin Wall, which had divided East and West, fell two months later.

"Hungary was there at the birth of the Germany of the 21st century," said Hungarian Prime Minister Viktor Orban at the ceremony.

He described the free passage of tens of thousands of East Germans as "a turning point in European history."

German gratitude

Speaking in the ornate, neo-Gothic parliament on the banks of the Danube, German Chancellor Gerhard Schr�der said he "brought the gratitude of the German people", who would never forget the deed that made German unification possible.

By November, the Berlin wall began to crumble

Mr Schr�der also thanked the Soviet leaders of that time, particularly President Mikhail Gorbachev, whose reform policies led to the end of communist rule across Eastern Europe.

The decision of Hungary, then a Soviet satellite, to allow East Germans to cross into Austria infuriated the communist East German government and other communist allies.

But it marked the beginning of eastern Europe's transition towards democracy.

After the exodus, Hungary's then communist premier Miklos Nemeth and foreign minister Gyula Horn, started secret talks with the then West German chancellor Helmut Kohl and foreign minister Hans-Dietrich Genscher about lifting the Iron Curtain.

East and West Germany united on 3 October 1990, little more than a year after Hungary opened its borders.

The Soviet Union officially broke up on 26 December 1991.