Europe's elite clubs agree peace deal with FIFA and UEFA

In what has been hailed "an historic day for football", the group of the world's richest clubs known as G14 - including Manchester United, Liverpool and Arsenal - will be dissolved and their court cases against FIFA withdrawn.

It means the threat of a European breakaway league featuring the top clubs has been removed.

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In a return move that will have far-reaching consequences for the game, FIFA and UEFA will make "financial contributions for players' participation in European Championships and World Cups".

The details of how clubs will be compensated have yet to be worked out but the world and European governing bodies have both agreed to the principle.

A new independent European clubs' organisation will also be set up that will be recognised by football's ruling powers.

The announcement follows a summit meeting between the clubs, FIFA and UEFA in Zurich after which FIFA president Sepp Blatter said: "Something very special has happened today.

"The clubs, which are the basic cells of our game and fundamental to its thriving, are at last to become a part of the pyramidal football organisation."

G14 had been a thorn in the side of the world and European governing bodies for more than a decade, threatening breakaway super leagues and taking legal action after players were injured on international duty.

Now the G14-backed cases brought by Belgium club Charleroi, over their Moroccan player Abdelmajid Oulmers, and French side Lyon, over Eric Abidal who broke his foot during a France friendly, will be dropped.

At today's meeting the clubs, FIFA and UEFA signed a letter of intent about the plans. As well as G14 being dissolved, the European Club Forum will evolve into the European Club Association - an independent body but recognised by FIFA and UEFA.

A statement released after the meeting read: "As part of the planned moves, UEFA and FIFA will enter into a series of commitments including financial contributions for player participation in European Championships and World Cups, subject to the approval of their respective bodies."

UEFA president Michel Platini added: "The demands of the clubs to be heard and to be associated, also financially, are well-founded.

"The letter of intent signed today is not a political step, but a logical one."

Speaking on behalf of the clubs, Barcelona president Joan Laporta praised the outcome of the meeting.

He said: "Friendship and confidence is the basis for our game. I compliment the UEFA president on having implemented the change he promised when he came to office. It is a victory for all."

UEFA will make the first move at the next meeting of the European Club Forum on January 21, and propose to create the new club body consisting of more than 100 clubs across Europe, including representatives from every one of the 53 national associations of UEFA.

Chelsea chief executive Peter Kenyon, who has played a leading role in the peace negotiations, is already being tipped to be one of the key figures in the new clubs' body.

Chelsea were not part of G14, and Kenyon, Laporta and AC Milan director Umberto Gandini have led the push for clubs to take a more productive and less antagonistic role with FIFA and UEFA.

Kenyon was at the meeting in Zurich, as was David Gill, chief executive of Manchester United, his Rangers counterpart Martin Bain and Rangers director John McClelland.