The Prime Minister of Papua New Guinea, Bill Skate, has welcomed an agreement with rebels on Bougainville island to extend an existing truce so that a permanent settlement can be negotiated.

Mr Skate said the latest accord, reached at talks in New Zealand, would bring reconciliation and peace. Under the agreement, there will be a gradual withdrawal of government troops and the United Nations will be asked to extend its ceasefire monitoring.

However, the central issue of sovereignty over the mineral-rich territory remains unresolved.

Don McKinnon speaking to the BBC's Robin Lustig (2'31)

The New Zealand Foreign Minister, Don McKinnon, who helped broker the deal, said: "The political status of Bougainville is something they have all agreed to look at in a positive way at a later date."

Talks went on for five days

The arrangements for the withdrawal of the 300 government troops on the island was the final sticking point in the talks. Now there will be a phased withdrawal and the United Nations will be asked to extend its ceasefire monitoring operation.

On Thursday, the Papua New Guinea government offered an amnesty to any rebels in exile who wanted to return home.

Marin Miriori of the rebel-backed Bougainville Interim Government described the ceasefire agreement as historic.

"We have had seven previous peace negotiations, this is the eighth and is by far the most successful," he said.

Most hopeful sign for years

The conflict on the island began in 1989 with a dispute over the earnings and environmental damage from a vast Australian-owned copper mine.

The issue became a focus for demands for independence from Papua New Guinea.

An estimated 20,000 people have died in the conflict, and many more have been driven from their homes.

The BBC Southeast Asia correspondent says that although the ceasefire does not amount to a final resolution of the conflict, it should open the way for Australia and other donor countries to channel much-needed funding into Bougainville's reconstruction.
 

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