The updated version of the 1990 Conventional Forces in Europe (CFE) treaty notably sets out new lower ceilings for key armaments and troops stationed in key areas in militarily sensitive border regions.

The signature took place on the last day of a summit of the Organisation for Security and Cooperation in Europe (OSCE) which has been dominated by discord over Russia's clampdown in Chechnya.

The row had threatened to block agreement on another key accord at the summit, the European Security Charter, scheduled to be signed later on Friday.

Russia has admitted that it is already breaching the military ceilings agreed in the new treaty in its Chechnya offensive, but the West has agreed to sign after Moscow committed itself to cutting back its forces once it is finished in the Caucasus republic.

Russia and the West on Thursday night reached acompromise accord on Chechnya after a stormy day of talks at the summit, diplomats said.

However, the deal on a Chechnya clause in the summit's final declaration was reached by foreign ministers only after Russian President Boris Yeltsin cut short talks with European leaders and flew home.

"They have agreed on the wording for the formulation on the Chechen question," said one diplomat at the OSCE summit, on condition of anonymity.

Another official said the deal comprised a five-point accord committing Moscow among other things to agreeing that "a political solution is of central importance in this crisis" and that the OSCE had an "instrumental" role to play.

"This agreement opens the way to the signature of the charter" for European security, said German foreign minister Joschka Fischer's spokesman Andreas Michaelis.