Karthikeyan to test for Williams

The team were part of a manufacturers' group threatening a breakaway championship, but have joined Red Bull, Ferrari and Midland in signing up.

A Williams spokesman said an improved offer from F1 supremo Bernie Ecclestone had persuaded team owner Sir Frank Williams to agree to the deal.

The Concorde Agreement governs the commercial running of F1.

The agreement, which runs out in 2007, sets out how revenues are distributed among the teams.

Five manufacturers, BMW, DaimlerChrysler, Renault, Toyota and Honda, have so far refused to sign the extension and are threatening a breakaway in 2008.

They are demanding better corporate governance and a bigger slice of the sport's commercial earnings.

From our point of view the latest offer was a good one Williams spokesman

Sir Frank Williams said he wanted to end the bitter battles within the sport.

"The manufacturers and teams have been a catalyst for a number of far-reaching changes to the economics and administration of Formula One," he said.

"We believe that the time has now come for everybody to remove the damaging uncertainty hanging over our sport and to commit to F1 after 2008.

"I hope our decision will encourage the remainder of the F1 community to join us and resolve any final details by working together.

It now looks like the breakaway series by the car manufacturers won't happen From Bal Have your say on Five Live

"We all have a duty to avoid a damaging split in our sport and I believe the undertakings we have from Formula One Management and the FIA provide a fair basis for bringing everyone together in the interests of the sport."

The Williams spokesman added the improved offer was key to the team's agreement.

"There have been discussions between Formula One Management, the FIA and the teams for a while now and from our point of view the latest offer was a good one," he said.

"It doesn't clear up all the objectives we had when we started negotiations but what was left on the list was not enough for a rival series.

"That would be bad for F1."

The five breakaway manufacturers, grouped as the Grand Prix Manufacturers' Association, released a statement after the announcement saying they would continue to press their claims.

"The five manufactures have reaffirmed their binding agreement to race together only in a series which satisfies the fundamental principles of a clear and equitable World Championship," said the statement.

"While the GPMA members and their affiliated teams appreciate that progress has been made in recent negotiations, they remain committed to their objective to further develop the sport for the benefit of all stakeholders and in particular the fans."