By Andrew Walker
BBC economics correspondent
The G7's finance ministers have agreed that some of the world's poorest countries should be able to have 100% relief on the debts they owe to international organisations, such as the IMF, the World Bank and the African Development Bank.
The G7 has to do more work before it can bring relief to poor countries
This decision, taken at a meeting in London, is an important new step in an initiative that began in the 1990s to tackle the debt problems of a group of very poor countries with severe debt burdens.
The underlying objective is to achieve a set of international objectives, known as the Millennium Development Goals, for reducing poverty and other related problems.
The key date for most of these targets is 2015, but at present, Africa is not on track to meet them.
UK Chancellor Gordon Brown says that on current trends it will not happen until well into the next century.
There is a lot more work to do before the debt relief decision has an impact on the ground.
One key issue is how to finance it, especially for the debts owed to the IMF.
Mr Brown wants to use the IMF's gold reserves, perhaps by selling or revaluing some - much of it is valued in the IMF's accounts at far below its current market value.
The US Deputy Treasury Secretary, John Taylor, said he was not convinced of the need to this. Still, he did not rule it out.
Brown has invested a lot in his proposals
What the G7 did agree was that the IMF's managing director, Rodrigo Rato, should bring proposals to the IMF and World Bank ministerial meetings in Washington in April.
They will also discuss how to finance relief on the debts owed to the World Bank and African Development Bank.
In addition, Mr Brown wants debt relief extended to more countries.
Under the initiative known as HIPC (highly indebted poor countries), 38 are eligible and 27 are receiving assistance.
Mr Brown wants to extend it to a total of 70 countries.
The G7 agreed only that the IMF and the World Bank should look at the debt issue in these other low-income countries.
The G7 also agreed on the need for more development aid. But again, there was no agreement on how to pay.
In particular, there was no agreement on Mr Brown's proposal for what he calls an International Finance Facility (IFF).
It would borrow money on the financial markets over the next 10 years, use the money to help developing countries and repay the loans from aid budgets after 2015.
There is some support from Germany, France and Italy, but Mr Taylor says the US cannot legally participate.
It might still go ahead, but probably without the US.
Mr Taylor did say that the US had quadrupled the aid it provides to Africa since President George W Bush took office.
He also said that Americans give generously as private individuals to development and relief efforts.
The G7 did agree to do more work on the IFF proposal.
They will also look at the US arrangement, called the Millennium Challenge Account, for funding aid, and also French and German proposals for new taxes on aviation fuel, airline tickets or some financial transactions.
The aim is prepare for decisions at to be taken at G8 summit (the G7 plus Russia) at Gleneagles in Scotland in July.
Like Mr Brown, the UK Prime Minister Tony Blair has invested a lot of effort in making progress on Africa's problems, and he considers it a very high priority for the G8 summit which Britain is hosting this year.