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After five days of talks in Geneva, Constantine Karamanlis of Greece, Bulent Ecevit of Turkey and James Callaghan of the UK have agreed a deal to end weeks of fighting on the Mediterranean island.
Mr Callaghan said: "It creates conditions under which Greece and Turkey can draw back honourably from making war on each other."
He has described it as a "common sense agreement", but Greek diplomats say it leaves Turkey - which invaded the republic of Cyprus on 20 July - in a stronger position.
Under the ceasefire, Turkish troops are prevented from making further advances and a UN-patrolled buffer zone will be established to keep warring Greek and Turkish factions apart.
Representatives from Greece, Turkey, the UK and the UN will determine the precise location and size of the buffer zone tomorrow morning, according to the positions of the opposing forces at 2000 GMT this evening.
The agreement is in line with UN Security Council Resolution 353 demanding withdrawal of all unauthorised troops and seeks to restore the terms of the peace agreed in Nicosia in 1960, which established independence and power-sharing.
Greece breached the 1960 treaty ten days ago by instigating a coup against elected Cypriot president Archbishop Makarios.
Turkey responded by sending in troops, since the Greek puppet regime threatens its minority on the island.
Turkish soldiers were still arriving on the island last night, swelling their force - permitted under the 1960 treaty - to 35,000 men and 300 tanks and other armour.
Speaking in London, the exiled president said he was pleased with the peace as long as all parties kept to it.
Greek, Turkish and British ministers will meet again in Geneva on 8 August to discuss further details of the settlement.
Greek-Cypriot and Turkish-Cypriot delegates will be invited to the conference on 10 August.
The United Nations continued to demand the withdrawal of unauthorised troops. But as further talks in Geneva collapsed, the Turkish army advanced eastward and by August 16 they had taken over 40% of the island.
Thousands were forced from their homes as Greeks in the Turkish zone and Turks in the Greek zone fled to opposite sides.
Glafkos Clerides acted as Greek-Cypriot president in the south, until Archbishop Makarios returned in December 1974.
Makarios remained as president until his death in 1977, when Spyros Kyprianou succeeded him.
Former vice-president of pre-partition Cyprus, Rauf Denktash, became president of the Turkish Federated State of Cyprus, proclaimed by Turkey in February 1975.
Northern Cyprus remains unrecognised by the international community, and the UN continues to protect the buffer zone - or Green line - separating the Greek and Turkish populations.
A UN plan put to a referendum on 24 April 2004 to reunite the island was rejected decisively by the Greek Cypriots but accepted by the Turkish Cypriots. EU membership only applies in the Greek sector.
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