Banerjee, in turn, announced the immediate suspension of her party’s two-year-old agitation on the issue and the fortnight-long sit-in demonstration at the factory site.

There was no immediate reaction from the Tatas who had earlier made it clear that there could be no compromise on the land holding pattern in Singur.

Reading from a prepared text of the understanding reached between the two sides, Gandhi said: “The government has taken the decision to respond to the demands of those farmers who have not received compensation, by means of land to be provided to the maximum within the project area and the rest in adjacent areas as early as possible. Towards this, a committee will be constituted to ascertain the scope and settle the modalities within a period of one week. During this time, the government will urge the vendors not to make any constructions. Mamata Banerjee is making an announcement regarding the suspension of the agitation from Singur. The government and those who have been agitating on behalf of the farmers will cooperate with each other for the benefit of the industry, agriculture and ancillaries.”

The talks, marked by twists and turns, was salvaged from the verge of collapse this evening following a last-minute demand by Banerjee, after a consensus was reached earlier, that land of all farmers acquired of vendors of ancillary units of the Tata Motors Nano car plant at Singur be returned to farmers. The near-breakdown of talks was, however, resolved at the initiative of Gandhi.

After the meeting, Banerjee said: “It is a victory for us. You have seen how we have fought for the Singur farmers for the past two years. We are happy.”

Bhattacharjee did not make any comment. The announcement of the truce was greeted with bursting of crackers in many parts of Kolkata. Celebrations were on at Singur too as Banerjee headed there to make a formal announcement.

Earlier in the day, CPM general secretary Prakash Karat, asked about Singur, told reporters in New Delhi: “We are of the view that the Tata’s small car project goes ahead and measures are taken for rehabilitation of those affected.”

The West Bengal Left Front committee also met at Alimuddin Street where Bhattacharjee briefed the partners about the land-based rehabilitation package that had been offered during the negotiations. The Front partners authorised him to seal the final rehabilitation package with the Opposition.