European Commission president Jean-Claude Juncker described the deal as a “fair and balanced agreement for the EU and UK” while British prime minister Boris Johnson described it as a “great new deal”.

The agreement follows days of tense last-minute negotiations focusing on arrangements for Northern Ireland and the Irish border. 

While Britain's exit from the EU on October 31st with a deal now looks a lot more likely there are still some hurdles to overcome – the European Council has to endorse the deal and British MPs have to approve it, which proved the sticking point for previous Prime Minister Theresa May.

The British parliament is expected to sit on Saturday when MPs will debate the bill. The House of Commons has three times refused to pass Theresa May's largely similar deal, and Boris Johnson's Conservative party does not have a parliamentary majority.

However he is hoping that changes to the deal around the contentious issue of the Irish backstop will be enough to persuade a majority of MPs to back the deal. He has apparently told European leaders that he is “optimistic” that he will be able to get the deal passed by parliament.

The Democratic Unionist Party (DUP) of Northern Ireland will lose its veto on whether the new arrangements in Ireland will come in to force.

The new deal has changes to the Irish border arrangements and VAT, but on questions of citizens rights for UK nationals living in Europe it is largely the same as Theresa May's deal.

A deal would also mean a transition period until at least December 31st 2020, during which all current rights such as freedom of movement would continue.

The transition period was originally intended as a two-year period during which the UK could begin negotiations on future deals, however repeated Brexit delays means that the current transition period is 14 months.

The EU's chief negotiator Michel Barnier has today said that it would be possible to extend this until October 2021 if both parties agree.

He told a press conference that “citizens have always been, and will remain, the EU’s priority”.

Uncertainty for them has been going on for too long, he added.

French president Emmanuel Macron, speaking as he arrived in Brussels for the European Council meeting, said he was “optimistic” about the deal.

He told reporters: “This agreement makes it possible, I believe, to address the political and technical concerns that were both our own and those of the British.

“We will meet this afternoon. There will then be elements of ratification to be taken to the British and European Parliaments, and it is at that time that this agreement can be finalised. But at this stage we can only be satisfied.”

He refused to be drawn on the likelihood of the deal passing through the British parliament.