Boris Johnson has withdrawn his plan to break international law by tearing up parts of the Brexit withdrawal agreement.
Michael Gove and European Commission Vice-President Maroš Šefčovič reached an agreement on outstanding aspects of the Withdrawal Agreement - including issues surrounding the Northern Ireland border.
In a joint statement, the UK and EU said that "an agreement in principle" had been reached on all issues.
But Mr Johnson still faces an uphill climb to secure a trade deal with the EU before the transition period ends on January 1.
The agreement covers issues including border checks on animal and plant products, the supply of medicines and deliveries of chilled meats and other food products to supermarkets.
There was also "clarification" on the application of rules on state subsidies.
In view of these "mutually-agreed solutions", the UK Government will withdraw clauses 44, 45 and 47 of the UK Internal Market Bill - which could have overridden the Withdrawal Agreement - and it will not introduce any similar provisions in the Taxation Bill.
MPs voted just last night to reintroduce the clauses to the bill - after they had been stripped out by the House of Lords.
Mr Gove and Vice President Šefčovič said: "Following intensive and constructive work over the past weeks by the EU and the UK, the two co-chairs can now announce their agreement in principle on all issues, in particular with regard to the Protocol on Ireland and Northern Ireland.
"An agreement in principle has been found in the following areas, amongst others: Border Control Posts/Entry Points specifically for checks on animals, plants and derived products, export declarations, the supply of medicines, the supply of chilled meats, and other food products to supermarkets, and a clarification on the application of State aid under the terms of the Protocol."
Louise Haigh MP, Shadow Secretary of State for Northern Ireland said:
“This is a welcome step forward, after months of crippling uncertainty for Northern Ireland.
“An agreement, not reckless threats, has always been the responsible way forward.
“Huge challenges remain to implement the Protocol by January 1st, and the Government must now work flat out to help businesses prepare, deliver the much-needed detail, and ensure the new arrangements impact as little as possible on Northern Ireland.”
It comes after Mr Johnson warned that talks with the European Union on a trade deal were proving "very tricky".
The Prime Minister said he was still hopeful about reaching a deal but it was proving "very, very difficult" to make progress.
Later this week Mr Johnson will head to Brussels for face-to-face talks with European Commission chief Ursula von der Leyen in an attempt to salvage a deal, with time running out before the current trading arrangements expire at the end of the month.
Mr Johnson said he hoped the "power of sweet reason" would triumph but Brussels had to accept there were limits to what terms the UK would be prepared to accept.
Talks have faltered on the issues of fishing rights, the "level playing field" measures aimed at preventing the UK undercutting the EU on standards and state subsidies, and the way that any deal would be governed.
In a message to Brussels, the Prime Minister said: "Our friends have just got to understand the UK has left the EU in order to be able to exercise democratic control over the way we do things.
"There is also the issue of fisheries where we are a long way apart still.
"But hope springs eternal, I will do my best to sort it out if we can."
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