The signing ceremony was broadcast live on Tanzanian television and attended by Commonwealth Secretary General, Chief Emeka Anyaoku.

The dispute began in 1995 after Zanzibar's first multi-party elections, which were won by the ruling Chama Cha Mapinduzi party.

But the polls were widely believed to have been rigged, and opposition MPs from the Civic United Front have boycotted parliament ever since.

Western aid to Zanzibar - which has a semi-autonomous status within a union with Tanzania - was suspended following the 1995 election.

Zanzibaris are now hoping the agreement will help reverse the economic decline of the once-fabled Spice Isles.

'Historic' agreement

Chief Anyaoku has hailed the Commonwealth-brokered agreement reached last month as historic.

Under its provisions, opposition MPs will finally take up their seats in parliament.

In return, the government has promised reforms which should ensure elections due in 2000 are fairer than the last ones.

Meanwhile, the fate of 18 opposition supporters held without trial since 1997 on treason charges has still to been resolved.

Economic hardship

Zanzibar's economy is almost entirely dependent on the export of cloves.

Chief Anyaoku called agreement 'a victory for common sense'

But clove prices on the world market have slumped mainly because of falling demand in Indonesia for cloves to flavour cigarettes.

BBC Africa Reporter Caroline Hawley says there is now a widespread hope that the deal being signed on Wednesday will help ease Zanzibar out of its paralysis.

Jobs are scarce and many young islanders now leave Zanzibar in search of a better life elsewhere, or turn to smuggling to make ends meet.