G7 finance ministers have backed plans to write off up to 100% of the debts of some of the world's poorest countries.
The US has poured cold water on Gordon Brown's debt relief plans
UK chancellor Gordon Brown said the London meeting of the world's seven richest nations would be remembered as "the 100% debt relief summit".
Some 37 countries could benefit after a case-by-case review by bodies including the World Bank and the IMF, he said.
But the US says it cannot support Mr Brown's International Finance Facility to boost aid to developing countries.
BBC correspondents said the meeting had produced some movement towards the UK's ambitions, but much work was needed.
Mr Brown said it was a major breakthrough for the international organisations to offer up to 100% multilateral debt relief - "the vast bulk" of money owed by the poorest countries.
"We could be at the beginning of the final stage of the process where the debts that were owed by the poorest countries, built up over 20 or 30 years, debts that are simply unpayable in the real world, are finally taken care of," he said.
He added: "It is the richest countries hearing the voices of the poor."
But he said they would insist on government reforms and the need for transparency, tackling corruption and openness from both the poorest and richest nations.
BBC correspondent Patrick Bartlett said while it was an agreement in principle, the organisations involved now have to look at how it would work in practice.
Oxfam senior policy adviser Max Lawson welcomed the statement and said G7 ministers had "passed the first hurdle of 2005".
But he added: "They need to move quickly to turn their proposals into real change for the world's poorest.
"Two million children will die needlessly between now and the next meeting in April. If rich countries are going to keep their promises to tackle obscene poverty they need deliver - and deliver quickly."
Talks are continuing on how to finance increased overseas development assistance.
The International Monetary Fund (IMF) is to look at a proposal to use its gold supplies to help the debt relief effort when it meets in April.
Mr Brown said G7 ministers had agreed to defer debt interest payments and repayments for some countries affected by the tsunami until the end of 2005.
But UK plans for an International Finance Facility (IFF) to help deal with debt in the developing world have not been agreed.
Mr Brown wanted to provide $10bn (£5.38bn) a year over a decade, using G7 backing so the money could be borrowed up front on financial markets.
It is a key element of his proposals for a modern version of the Marshall Plan, which brought US aid to rebuild Europe after World War II, for the developing world.
Mr Brown said it was "winning support every day" and said a programme had been agreed to draw up more details in time for the G8 summit in July.
But US Treasury Under-Secretary John Taylor said the US could not support the IFF because of its "legislative process".
"The US is completely committed to poverty reduction and providing financing to do that," he said.
"But this particular mechanism does not work for the United States. It works for other countries, and that is fine."
Earlier, he told BBC Radio 4's Today programme the US had increased support for Africa in the past four years from $1.1bn per year to $4.6bn per year.
But South Africa Finance Minister Trevor Manuel told the BBC's Talking Point programme what was needed was one approach, with all wealthy nations on board.
He said much of the money pledged by the US had not yet been dispensed.
The UK has made poverty in the poorest nations a key theme for its 2005 presidency of the Group of Eight (G8), which comprises the G7 and Russia. The G8 countries will meet at Gleneagles in Scotland.
At a dinner on Friday night, former South African president Nelson Mandela backed Mr Brown's plan when he urged the finance chiefs to write-off African debt and provide an extra $50bn (£26.69bn) a year in aid for the next decade.
Talks also centred on the impact of the rising economies of China and India, the US budget and trade deficits, how the US, Europe and Japan can act to boost global economic growth, and HIV/Aids.
G7 ministers called for more flexibility in international exchange rates and said "excess volatility" would impede economic growth.
Representatives from China, India, Russia, South Africa and Brazil were invited to attend some of the sessions.
A G8 summit is set to take place in July.