Toppled Honduran President Manuel Zelaya speaks to journalists at the Brazilian embassy in Tegucigalpa on October 30, 2009. (Orlando Sierra/AFP/Getty Images)
The breakthrough late on Thursday followed renewed pressure from senior U.S. officials who traveled to Honduras this week for a last-ditch effort to end a crisis that has given U.S. President Barack Obama a foreign policy headache.
"It is a triumph for Honduran democracy," the leftist Zelaya said after the rival sides agreed to a deal that he said should see him restored to office in the coming days.
Congress still needs to approve his return and it originally backed the coup against him but Zelaya said he did not expect any new setbacks. "This is a first step. My reinstatement is imminent, I'm optimistic," he told Reuters.
U.S. Secretary of State Hillary Clinton praised the deal as a victory for democracy in Latin America. "This is a big step forward for the Inter-American system and its commitment to democracy," she said in Islamabad.
Zelaya was toppled and sent into exile on June 28 but crept back into Honduras last month and has since been holed up in the Brazilian embassy with Honduran troops surrounding the building and his rivals demanding his arrest and trial.
De facto leader Roberto Micheletti, who took over the country within hours of Zelaya 's ouster, had repeatedly refused to step aside to let the leftist return, but he softened his position on Thursday.
"I have authorized my negotiating team to sign a deal that marks the beginning of the end of the country's political situation," Micheletti told reporters on Thursday night.
He said Zelaya could return to office after a vote in Congress that would be authorized by the country's Supreme Court. The deal would also require both sides to recognize the result of a Nov. 29 presidential election and would transfer control of the army to the top electoral court.
If approved by Congress, Zelaya would be able to finish out his presidential term, which ends in January. It was not clear what would happen to other elements of the agreement if Congress votes against Zelaya's restoration.
Micheletti said the deal will create a truth commission to investigate the events of the last few months, and would ask foreign governments to reverse punitive measures like suspending aid and canceling the travel visas of prominent figures involved in the coup and the de facto government.
End of Isolation
The United States, the European Union and Latin American leaders had all insisted Zelaya be allowed to finish his term and they threatened not to recognize the winner of the November election unless democracy was first restored.
A U.S. team led by Assistant Secretary of State Tom Shannon and Dan Restrepo, Washington's special assistant for Western Hemisphere affairs, sat in on talks earlier in the day and warned that time was running out to reach a deal.
The coffee-producing Central American country has been diplomatically isolated since Zelaya was rousted at dawn by soldiers on June 28 and flown to exile on a military plane.
Zelaya had angered many in Honduras by becoming an ally of socialist Venezuelan President Hugo Chavez. Critics also alleged he was seeking backing to extend presidential term limits, a claim he denies.
Human rights groups have documented major abuses by the de facto government and say free and fair elections would be impossible after Micheletti curbed civil liberties and temporarily shut down pro-Zelaya news organizations.
Obama cut some aid to Honduras after the coup but had been criticized by some Latin American for not doing more to force the de facto government to back down. At home, however, some Republicans accused him of doing too much for Zelaya.
The collapse of talks last week prompted Secretary of State Hillary Clinton to dispatch the U.S. delegation to push again for a negotiated settlement.
