An “agreement in principle” has been reached on Northern Ireland aspects of Brexit, the EU and UK said.
The British Government confirmed it will withdraw controversial measures which could have seen the divorce deal torn up and the UK break international law.
The agreement covers issues like border checks on animal and plant products, the supply of medicines and deliveries of chilled meats and other food products to supermarkets.
There was also “clarification” on the application of rules on state subsidies.
It follows progress in talks led by Cabinet Office minister Michael Gove and Maros Sefcovic from the European Commission.
They co-chair the EU-UK Joint Committee, which oversees the implementation of the Withdrawal Agreement and Northern Ireland Protocol.
In a joint statement, the UK and EU said “an agreement in principle” had been reached on all issues.
In view of these “mutually agreed solutions”, the UK Government will withdraw clauses 44, 45 and 47 of the UK Internal Market Bill – which could have overridden the Withdrawal Agreement – and will not introduce any similar provisions in the Taxation Bill.
The statement said: “Following intensive and constructive work over the past weeks by the EU and the UK, the two co-chairs can now announce their agreement in principle on all issues, in particular with regard to the protocol on Ireland and Northern Ireland.”
The announcement was separate from ongoing trade talks.
The protocol is due to come into effect from the start of next year and would keep Northern Ireland in line with some EU regulations on the single market to allow an open border and free flow of goods and services across the island.
Irish Foreign Affairs Minister Simon Coveney said the agreement was positive news.
He said: “Of particular significance is the commitment by the UK to withdraw clauses 44, 45 and 47 of the Internal Market Bill, bringing it back into line with its obligations under the Withdrawal Agreement.”
The Bill had prompted the the EU to launch legal action against the UK during an increasingly acrimonious row.
It could have allowed ministers to override the UK’s EU Withdrawal Agreement as it contained measures relating to the way trade will be done between Northern Ireland and Great Britain.
The protocol says companies moving goods from Northern Ireland to Great Britain would have to fill out export declaration forms.
The Internal Market Bill would have given ministers the right to overrule this part of EU customs law.
Mr Coveney said: “This positive development comes after significant and productive engagement between the EU and the UK on implementation of the protocol, as provided for under the Withdrawal Agreement.
“I hope this may also provide some of the positive momentum necessary to instil confidence and trust and allow progress in the wider context of the future relationship negotiations.”
Aodhan Connolly, director of the Northern Ireland Retail Consortium, which represents larger businesses, said it was a hugely positive development but businesses will need the technical detail as soon as possible.
“Even more than the detail, we will need to see that they work and enable the retail industry to continue to provide the people of Northern Ireland the choice and affordability that they desperately need.”