Consultants had threatened industrial action

The announcement follows two weeks of intensive talks between both sides and follows eight-months of deadlock.

The BMA said it has secured key concessions from ministers.

The agreement relates to consultants in England only. Separate negotiations are underway in Scotland, Wales and Northern Ireland.

Consultants' concerns

Consultants rejected a proposed new NHS contract in a nationwide ballot last October.

Many feared it would give NHS managers too much power over how they work.

These discussions have been serious, professional and at times tough Health Secretary John Reid Q&A: Contract deal

They also objected to proposals to force them to work evenings and weekends without additional pay.

According to the Department of Health, these issues have now been resolved.

In a statement it said that the issue over managerial control has been "clarified".

The new contract will also include a clause saying that consultants will only work evenings and weekends "by agreement".

Evening and weekend sessions will be reduced from four hours to three hours.

Ministers also appear to have backed down on demands that newly-qualified consultants offer to work an additional eight hours a week for the NHS before they carry out private work.

Under the deal, newly-qualified consultants will, like their colleagues, have to offer the NHS one session of four hours per week before doing private practice.

'Tough talks'

"We believe that this is the best available contract package," said Dr Paul Miller, chairman of the BMA's consultants' committee.

"In the past two weeks we have had intensive, difficult, but constructive talks with the Department of Health.

"We have made progress on a number of issues which are very important for consultants."

The deal will be discussed by members of the BMA's consultants committee in August.

If they back the contract, consultants in England will then be asked to vote on it.

Health Secretary John Reid said: "These discussions have been serious, professional and at times tough."

He added: "Obviously consultants will want to consider this deal and vote on it, but I hope that they recognise the benefits of going forward together in this way."

Ministers had refused to hold fresh talks with the BMA for over eight months.

They had been pressing trusts to introduce the contract locally. However, there was little support for this among doctors.

Consultants had threatened to take industrial action unless ministers re-opened talks on a new contract.

Mr Reid backed down earlier this month and agreed to hold fresh negotiations.

Gill Morgan, chief executive of the NHS Confederation which represents health service managers, welcomed the deal.

"We believe that the contract is a good deal for consultants and for the NHS and hope that it is accepted by consultants as soon as possible."

Liberal Democrat health spokesman Dr Evan Harris: "This is a most welcome climb-down by the government."

He added: "It remains to be seen whether the consultants will accept the deal."