It is hoped the agreement will bring an end to more than two months of political deadlock in Stormont, triggered by accusations that the IRA was still operating. Difference of opinion on the British government's welfare changes also added to the political impasse.
Sinn Fein and the DUP, Northern Ireland's two biggest parties, have agreed to the deal, however the Alliance Party, whose leader is also part of the executive, has said it does not.
The new agreement, called 'A Fresh Start', mandates politicians to work towards the disbandment of all paramilitary groups, and to take no instructions from anyone except those who have given them a democratic mandate.
To support these reforms, a new independent body with members from the British, Northern Irish and Republic of Ireland governments to monitor paramilitary activity will be set up. It will not have the power to recommend certain parties be excluded from Stormont, unlike the previous monitoring body had.
A new task force will help bring together British and Irish governmental agencies such as HMRC, the Police Service of Northern Ireland, and the National Crime Agency.
While British government welfare changes will still be going ahead, an extra £21 million has been pledged to mitigate its effects on poorer people. Previously, £564 million was pledged to soften the cuts, which has now been raised to £585 million.
However victims have criticised the new agreement for failing to address legacy issues - dealing with disappearances, murders and other criminal activity which happened during The Troubles.
A joint letter from the Methodist, Catholic, and Presbyterian Churches, as well as the Irish Council of Churches and the Church in Ireland, said: "As Church leaders, we came together in September and called on our elected representatives to place at the heart of their discussions 'an awareness of their shared responsibility for the common good'.
"Today we welcome the announcement, that with the support of the two Governments, a wide ranging agreement has been reached.
"We recognise that everyone involved in the negotiations will not have achieved all that they wanted in this agreement, nor will everyone who reads it be fully content with every aspect of it. Such is the nature of any agreed accommodation.
"However, we pray that this particular accommodation reached in the interests of all, will be the basis for beginning to restore hope to those who are struggling and re-establish the trust that has been slowly ebbing from our political institutions."
