Kitson has agreed a two-and-a-half year deal and his fee will rise depending on appearances and promotion.

Cambridge said they had "reluctantly accepted" the offer because of their financial problems but U's boss John Taylor will not get any of the money.

Kitson is cup-tied and the first game he can play for Reading is against Ipswich on 10 January.

Kitson joined Cambridge from non-league Arlesey Town in March 2001.

He scored 25 goals in all competitions last year and was named in the Professional Footballers' Association Division Three team of the season.