The Democratic Unionist Party (DUP) are “in a position” to restart the executive in Northern Ireland after a near two-year absence – if ministers keep to the “agreed timeline” over a fresh deal on post-Brexit trade, their leader has said.

The power-sharing agreement between the main parties at Stormont collapsed in 2022, with the unionist party refusing to return over its opposition to the government’s deal with the EU – which left a trade border down the Irish Sea and additional checks on goods travelling between Great Britain and Northern Ireland.

Sinn Fein also won the election for the first time, meaning the return of executive would see Northern Ireland’s first nationalist first minister installed – Michelle O’Neill – with the DUP taking the deputy first minister role.

Politics live: Stormont set for historic first minister as post-Brexit deal struck

The DUP and UK government have been at loggerheads over trade arrangements and the impact of the direct border with the EU on the island of Ireland.

But in the early hours of Tuesday morning, it was revealed an agreement had now been reached, paving the way for the assembly to get up and running again.

Leader of the DUP, Sir Jeffrey Donaldson, told reporters on Tuesday afternoon that the deal offered “further legal change that will be of real benefit to businesses in Northern Ireland [and] ensures that Northern Ireland benefits in full from UK free trade deals”.

He added: “These were key elements in our requirements in our negotiations from the government.”

The president of Sinn Fein, Mary Lou McDonald, told Sky News’ Politics Hub With Sophy Ridge that it was a day of “very great hope” and “some relief”, saying: “Of course there are some final matters to be concluded before the assembly is recalled, but it’s very positive here today in Belfast and right across Ireland.”

Ms McDonald also pledged that her colleague, Ms O’Neill, held a “deeply sincere commitment to act as a first minister for all”.

She added: “We will look to find the common ground, the high ground… and so I would say to the unionists in particular to take heart from the fact that we now have the chance for change and a platform to advance everybody’s standard of living, everybody’s life experience.”

The full details of the deal have yet to be released, with Sir Jeffrey saying they were set to come tomorrow.

But he did reveal the so-called “green lane” for goods being sent across the Irish Sea would be replaced by the UK internal market system that “reflects the reality that the UK is part of the United Kingdom”.

The DUP leader continued: “Goods flowing within the UK will flow freely – that was our core, key objective, and I believe what we have secured is real change and everybody will be able to see it for themselves.”

EU throws Sunak a bone over NI

Sam Coates

Deputy political editor

@SamCoatesSky

So the government has produced a rabbit out of the hat, just as we teeter on the edge of a deal to restore Stormont.

Suddenly they’ve revealed the fruits of months of secret negotiation with the EU, to change the legal text governing the way trade operates in Northern Ireland.

After some speculation that the UK was prepared to rewrite the rules unilaterally, it’s emerged that the EU not only knew, but were prepared to throw the UK government a bone in order to assist Rishi Sunak getting the Northern Ireland Assembly up and running.

Hard-line unionists will no doubt say it does not deal with the fundamental, quite existential questions raised by the Windsor Framework likely to play out over the next 20 years.

Nevertheless, the EU has been prepared to extend the range of goods it is content to see going into Northern Ireland without checks.

The change means the EU has agreed to expand the “not at risk” category of stuff that can use the goods Green Lane, which doesn’t require checks.

Supporters are claiming this means Northern Ireland can properly take advantage of free trade agreements struck by post-Brexit Britain.

Northern Ireland Secretary Chris Heaton-Harris says that it means a cut to food tariffs to goods like New Zealand lamb and Australian beef. We shall see.

Critically, politically, it has allowed Jeffrey Donaldson to strike a note of vindication against critics who say the “deal” the DUP has agreed to is meaningless.

“This demonstrates that the naysayers are wrong. There will be legal changes,” he trumpeted on social media.

This is further than many expected, and takes us even closer to a restoration of Stormont that feels closer than it has ever been so far.

The deal also has sign off from the EU, with a document being published from a joint committee with the UK showing the bloc was happy for more goods to head to Northern Ireland without being checked.

“We believe this represents a significant change,” said Sir Jeffrey. But he did appear to issue a thinly veiled warning to UK ministers.

“On the basis that the government continues to deliver the strength of the agreed timeline that we reached with them, then we will be in a position to convene a meeting of the assembly and proceed with the restoration of the political institutions,” he said.

Sir Jeffrey also confirmed that along with the civil service, Northern Ireland parties from all sides had already been meeting to discuss the issues at hand, including an ongoing dispute over public sector pay.

Earlier, the UK government’s Northern Ireland Secretary, Chris Heaton-Harris, welcomed the agreement, telling reporters: “I believe that all the conditions are now in place for the Assembly to return, and I look forward very much to the restoration of the institutions at Stormont as soon as possible.”

He also did not reveal specifics of the deal – saying other parties needed to be briefed first – but confirmed a financial package of £3.3bn will be available to the incoming executive.

However, Ms McDonald said: “The north of Ireland has been underfunded for a very, very long time.

“Although the headline figure of £3bn sounds like a lot, the reality is that it is still going to be a huge, huge challenge to fund this place correctly.”

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Meanwhile, in her interview with Sky News, the Sinn Fein president also said “the days of partition are numbered”.

Ms McDonald’s party wants to see Northern Ireland and the Republic of Ireland united as one country – unlike the unionists, who want Northern Ireland to remain part of the UK.

She told Sophy Ridge: “The reality is that so long as Ireland is partitioned, we will face very, very significant economic challenges and disadvantages here in the North and all along the border.”