The RUF rebels are slowly disarming but mistrust remains
The agreement is intended to pave the way for the disarmament of the Revolutionary United Front rebels and other militias and the deployment of thousands of UN peacekeepers from Pakistan in the area.
Mining and smuggling in the rich diamond fields of eastern Sierra Leone have been one of the root causes of the devastating war which has spilled into neighbouring states and destabilised the entire West African region.
The UN, which has sent its biggest current peacekeeping force to Sierra Leone, has hailed the talks as a success and a sign of further progress in ending the horrific 10-year war.
But our West Africa correspondent warns that the ban will be extremely difficult to enforce. He says the mines are mainly in remote rural locations, and thousands of armed men know no other way of making a living there but mining, smuggling and fighting.
The UN-brokered talks lasted eight hours and took place in the second city of Bo, which itself is one of the main trading posts for illegally mined diamonds.
Differences
A ceasefire agreement has largely held since it was signed in May. but correspondents warn of considerable mistrust between the different armed factions in the region.
The UN has been keen to iron out these differences before it deploys the peacekeepers in the diamond areas.
Thousands of fighters have disarmed in other parts of Sierra Leone in recent weeks, but the RUF accuses government militia men of attacking their positions in the diamond areas, and at one point threatened to stop disarming because of this.
That immediate threat has now been withdrawn.
Progress The UN began deploying troops in Sierra Leone a little over a year ago: the first few months of the operation were a disaster, with hundreds of peacekeepers being kidnapped by the rebels.
But since then, the international force has made considerable progress in bringing peace to Sierra Leone.
International sanctions imposed on Liberia, who have been accused of being the rebel's main backers and of being the main export route for the diamonds, also appear to be having an impact.
The UN has been helped by a military contingent from the British Army, which although not part of the UN force has been training Sierra Leone government troops to face up to the rebels.