BSkyB is to lose its monopoly over live coverage of English Premier League matches, under a radical shake-up of the way football TV rights are sold.
BSkyB's current TV rights deal runs out in 2007
The deal between the Premier League and the European Commission will ensure other broadcasters get access to live coverage of Premiership matches.
The league is to create six packages of "balanced" content, which would then be auctioned off to broadcasters.
Under the deal, BSkyB would not be permitted to bid for all six packages.
The Commission had threatened to take legal action against the Premier League if it failed to agree new arrangements giving other broadcasters a slice of live TV coverage of matches.
European Competition Commissioner Neelie Kroes said the new system would provide football fans with "greater choice and better value".
"The commitments offered by the Premier League should ensure that the media rights are sold in a fair and transparent manner," Ms Kroes said.
European Commission competition regulators have raised concerns over pay-TV broadcaster BSkyB's dominance of live football coverage.
The deal, announced in Brussels on Thursday, marks a breakthrough in a dispute between the Commission and Premier League chief executive Richard Scudamore.
Sky will show 138 Barclays Premiership games this season
Mr Scudamore had previously argued that the EU proposals would "damage the game at all levels".
But the Commission had insisted that at least two broadcasters must have a "viable and meaningful" share of football TV rights in England to ensure viewers have more choice.
BSkyB owns the current packages of live matches running until 2007, under a £1.024bn ($1.77bn) deal agreed with the Premier League in 2003.
The satellite broadcaster has held the live rights to Premiership football in England since 1992, a position which has helped it become Britain's leading pay-TV service.
Under the deal, other broadcasters will now stand a chance of getting a share of the rights to cover live Premiership matches.