Spanish troops have withdrawn from the tiny island of Perejil, clearing the way for Madrid and Rabat to ratify a US-brokered deal to defuse the present crisis over the disputed rock.

The Spanish Government thanks Secretary of State Colin Powell for the work done in order to reach this agreement

Spanish Government statement

The two sides have agreed to a settlement put together by US Secretary of State Colin Powell, which simply stipulates a return to the situation that existed prior to the start of hostilities 10 days ago.

Both countries claim sovereignty over the island, which lies 200 metres (650 feet) off the Moroccan coast.

On 11 July, Morocco sent half a dozen troops to occupy the island, but they were dislodged by Spanish forces - keen to reassert Spain's authority - on 17 July.

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Correspondents say that under the deal, the two sides will agree to have no flags, signs of sovereignty or permanent encampments on the island.

Spanish Foreign Minister Ana Palacio is expected to formally sign the agreement with her Moroccan counterpart, Mohamed Benaissa, in the Moroccan capital Rabat on Monday.

'Understanding'

The breakthrough in the dispute followed intense US mediation efforts after the two sides refused to negotiate directly.

Perejil island

200m off the Moroccan shore in the Straits of Gibraltar Less than 1km in diameter Rocky and uninhabited Visited by herdsmen who take their goats to graze Named after the wild parsley which grows there - Perejil means "parsley" in Spanish Known in Morocco as Leila

In a statement on Saturday night, US Secretary of State Colin Powell said Spain and Morocco had reached an "understanding" to resolve the row.

"In accordance with this understanding, the two sides have agreed to restore the situation regarding the island that existed prior to July 2002," he said.

The Spanish Government thanked Mr Powell for his efforts, noting that the accord "envisages" a return to the island's former status.

French news agency AFP quoted a Moroccan official as saying that Morocco was "pleased that the Spanish forces are leaving" the island, which Morocco calls Leila.

Gibraltar spur

Morocco said it had sent the troops to thwart drug trafficking and smuggling on Perejil, and had described Spain's eviction of them as a "declaration of war".

The US is seeking to demilitarise the island

Observers noted that Morocco's occupation of Perejil was aimed at raising the thorny issue of other disputed Spanish enclaves, Ceuta and Melilla, along the north African coast.

It is thought that Morocco may have been encouraged to make the move by current negotiations between London and Madrid over sharing the sovereignty of the British colony of Gibraltar.

Spain justifies its hold on enclaves in north Africa using very similar arguments as those used until now by Britain concerning its claim on Gibraltar.

The two countries were under intense pressure to resolve the dispute before a meeting of European Union foreign ministers in Brussels on Monday.

The EU had previously given its backing to Spain, which has sovereignty over the islands, while Arab nations supported Morocco's claim.

Hours before the deal was struck, Spanish soldiers detained a 27-year-old Moroccan man who reached the island carrying two Moroccan flags.

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