The agreement, which follows 30 years of consultations among theologians, was hailed by both sides as a major step towards healing the rift.

Rome Correspondent David Willey: "Negotiating the text for 30 years"

The "Joint Declaration on the Doctrine of Justification" is aimed at resolving a doctrinal debate at the heart of the Protestant Reformation - whether Christians are saved by their faith alone or also by their good works.

Rome said there was no salvation except where good works are performed, while the Lutherans believed that salvation depended ultimately only on God's grace.

Now both religions have agreed on a form of words which encompasses their beliefs.

The declaration states that divine forgiveness and salvation come "solely by God's grace" and that good works flow from that.

"We do not claim agreement on all issues related to the doctrine of justification," said the Reverend Ismael Noko, who headed the Lutheran World Federation's delegation. "Nevertheless, we have reached consensus on the principal points."

The churches have now achieved "a decisive step forward in the process of reconciliation," said Rev Noko.

Key date

The Wittenberg church where the reformation started

The declaration and the new additions will be formally signed on 31 October in Augsburg, Germany, the anniversary of the day in 1517 widely regarded as the launching of the Protestant Reformation - when Martin Luther is said to have posted his 95 Theses on the door of the Castle Church in Wittenberg, Germany.

Cardinal Edward Cassidy, who led the Vatican's negotiating team, says he will sign for the Roman Catholic Church. The Lutherans have yet to decide who will sign for the federation.

Both sides lifted the reciprocal condemnations that they issued in the 16th century.

Cardinal Cassidy said the document was not a compromise, but was based on a spirit of reconciliation.

At the end of the longest pontificate of the 20th century, Pope John Paul is urging reconciliation between the various separated Christian churches.

Although the Vatican's dialogue with the Anglican Church has come to a halt because of the latter's decision to ordain women priests, parallel talks with the Lutherans seem to be proceeding more smoothly.