The Paris Club of creditor countries has agreed the outline of a debt relief package for Nigeria.
The Paris club has said there will be significant Nigerian debt relief
About $18bn (£10bn) of debt will be written off and Nigeria plans to buy back a chunk of outstanding loans.
The country owes the rest of the world $35bn, and the new talks are linked to an agreement between Nigeria and the IMF on debt repayments.
Nigeria is the world's seventh-largest oil exporter and Africa's most populous nation, but also one of its poorest.
About $31bn of Nigeria's debt is owed to members of the 19-nation-strong Paris Club. It has not received any fresh loans since 1992, but repaid $8bn debt since then.
Part of Nigeria's case in asking for debt relief has been that most of the money it received was lent to corrupt military dictators, a fact the African country says was well known by foreign banks and governments.
The UK's Chancellor of the Exchequer, Gordon Brown, said the debt relief combined with the debt buy-back would "mean there is 100% debt relief for Nigeria possible over the next six months".
The UK is Nigeria's biggest creditor and has been attempting to persuade other G8 creditors of the need for debt write-off.
The debt breakthrough came after Nigeria expressed its willingness to clinch a new deal with the IMF to pay its arrears to Paris Club creditors.
"The representatives of the Paris Club creditor countries... expressed their readiness, consistent with their national laws and regulations, to enter into negotiations with the Nigerian authorities in the months to come on a comprehensive debt treatment," said the group of creditor nations.
"They took note of the economic reform programme implemented by the Nigerian authorities since 2003 and of their willingness to take advantage of exceptional revenues in order to finance an exit treatment from the Paris Club."
It said the debt relief would be significant, and allow for long-term debt sustainability.
The initial debt relief terms will be based on the so-called "Naples terms" - which are equivalent to a 67% reduction on the face value of debt and are applied to debts of poorest nations.
"As an initial negotiating position, it is welcome, but Nigeria will naturally press for a higher discount," said Nigerian senator Udo Udoma.
"It is a major development because about a year ago they (Paris Club) were not willing to listen to any plea for debt relief.
"To move from zero to 67% within a year is a major development, I am excited by that."
Campaign group Actionaid welcomed the deal, saying that "Nigerians have been paying out in debt repayments nearly six times the amount they receive in aid."
"As home to one in five Africans, progress on debt in Nigeria is critical to progress on poverty in Africa," the organisation said.
And international development minister Hilary Benn said: "This deal will help to change the lives of millions of people in Nigeria.
"Today's deal is a major step in bringing a better future for the people of Nigeria, in a country in which seven million children receive no schooling at all and one in five die before their fifth birthday."