However, family planning groups in the United States have criticised the agreement as "shameful", because it will limit their access to government funding.

Mr Annan said the deal between the White House and the US Congress was a "step in the right direction".

But he added: "It does not cover the total debt the US owes to the UN."

Mr Annan said it was "encouraging" that Congress had agreed to pay most of the money the US owes in return for an agreement by the Clinton administration to accept some restrictions on US funds for international family planning groups that promote abortion.

Sir Jeremy Greenstock: "The US is committed to the UN but is not paying its dues"

"It has not been voted yet nor has the president signed it, but the expectations are these will be done," the secretary-general said.

The British ambassador to the UN, Sir Jeremy Greenstock,said the deal was welcome but that there was still a lot of work to do to make the conditions acceptable.

Abortion is an emotive political issue in the US

The original legislation for the payment includes demands that the US share of the regular UN budget be reduced from the present 25% to 20%, and that its share of peacekeeping operations be reduced from 31% to 25%.

Sir Jeremy said this would mean the US was paying "well below its capacity" which would not be popular with member states.

US Ambassador Nancy Soderberg was relieved a deal had been reached, saying it had been "an embarrassment" worldwide for the US not to have paid its dues for so many years.

'Shameful' compromises

However there has been condemnation of the decision to restrict funding to international family planning groups, a condition demanded by anti-abortion Republicans.

The BBC's Paul Reynolds: Compromise would end long-running argument

The US Government currently spends $385m a year on such organisations.

Amy Coen of lobby group Population Action International said the vast majority of Americans disagree with linking the US debt with the issue of abortion.

"The US Congress is doing a deal that is not at all in alliance with what the American viewpoint is."

She said it was "ridiculous" and "shameful" that a powerful organisation like the UN and countries like the US were making compromises on women's issues.

Debt agreement

The US is the largest contributor to the UN but also its largest debtor, owing about $1.7bn, according to UN figures. Washington puts the amount at closer to $1bn.

The budget agreement would release $926m over a period of three years for the payment of UN dues.

Republicans look likely to agree to the deal if their conditions are met.

However, in a victory for the White House, the reduction in spending on family planning groups could be as little as $10m a year and will apply only to this year's budget appropriations.

House Republicans had sought to make the reduction permanent and much larger.

A deal on the UN dues is one of the final remaining obstacles to a deal between the White House and Congress on the budget for the fiscal year 2000, which began on 1 October.

Emergency funding measures have kept the US Government running since then.

Deadline

If the US does not pay at least $550m by 31 December, it will lose its vote in the UN General Assembly.

Failure to pay would not jeopardise the US General Assembly seat or its vote on the UN Security Council.

Canadian Ambassador Robert Fowler said his government had "severe problems" with the fact that the deal did not cover all US arrears, but if it meant that in the short term the US did not lose its vote in the General Assembly, it was good news.

US Ambassador Richard Holbrooke described the deal as "a historic step forward" despite the strings attached.