The European Commission says the production-subsidy link will be broken

The deal sealed by agriculture ministers after three weeks of talks will substantially reduce the huge 43bn euro ($50bn) subsidies.

The original proposals were watered down in the face of countries like France, whose farmers can keep most of their subsidies until 2007.

Critics say the deal is a messy fudge, but Mrs Beckett told MPs in a Commons statement that it was hard to overstate the importance of the agreement.

Initial indications are that this falls far short of the radical reform needed David Lidington Shadow environment secretary

The National Farmers' Union has also hailed the deal as an "enormously significant step" in reforming the Common Agricultural Policy.

The changes include abolishing most of the subsidies that reward farmers according to how much food they grow.

Instead, farmers will receive a single payment for improving the environment and looking after the countryside.

Individual countries will be able to stick to the old system if there is a risk that the new system would lead to land being abandoned.

The prices at which the EU intervenes to support farmers are also to be cut in key sectors, including milk powder and butter.

French stance

The agreement commits the UK to breaking the link between subsidies and production - so-called "de-coupling" - completely by 2005.

Mrs Beckett said: "This agreement delivers what we want - real change."

She told BBC Radio 4's Today programme it was an excellent deal.

Margaret Beckett (right) denies caving in to France

"Obviously in an ideal world, people would like to do more, but given where we started from, we have done immensely well."

The French agriculture ministry said the deal preserved the essential principles of the CAP.

But Ms Beckett rejected the suggestion that the UK and other countries have caved into French demands.

"I think people just need to take a look at how far France has moved to come to this agreement and what a dramatic change and shift that is," she said.

France had the option to go more slowly with the change if it wanted, said Mrs Beckett.

"But whether they will in the end wish to do so remains to be seen, and certainly it's not something which has stopped others like ourselves from making the changes we want to make."

'Fudged'

Conservative shadow environment secretary David Lidington said his party would look carefully at the details of the deal.

But his initial reaction in the Commons was that the agreement was a "botched compromise that falls far short of the radical changes needed."

Liberal Democrat agriculture spokesman Andrew George said the agreement could only be greeted with "one cheer as it leaves two large fudges in the middle of farming policy".

The CAP would now be applied differently across each farming country and payments for production had only partly been "de-coupled", he argued.

"This double fudge means that the CAP debate will still rage," added Mr George.

'Major change'

NFU President Ben Gill said the union would have liked to seen payments and production completely separated.

But he added: "The agreement last night marks an enormously significant step in the future direction and reform of the CAP.

"It gives, for the first time in 50 years, farmers the option of focusing exclusively on customer needs and the market place without the distractions of ever more complex and bureaucratic support systems that have evolved in the last two decades and which have cost farmers significant sums of money."

Phil Bloomer, from the charity Oxfam, said the agreement did nothing to help the millions of poor people across the world "whose lives are destroyed by subsidies".

He complained the production-subsidy link was not really being broken as farmers would use payments based on farm size to continue to produce food surpluses.