It will also allow them to widen technological co-operation in areas such as storing nuclear materials.

Russia's top nuclear official Sergei Kiriyenko and US ambassador William Burns signed the deal in Moscow.

It comes the day before Russian President Vladimir Putin steps down in favour of Dmitry Medvedev.

"The US and Russia were once nuclear rivals," Mr Burns said after the signing ceremony.

"Today, we are nuclear partners with unique capabilities and unique responsibilities for global nuclear leadership."

It is a deal that pales in significance beside the major strategic arms control treaties of the past, says BBC diplomatic correspondent Jonathan Marcus.

But, in a minor key, it is a small reminder of the days when Washington and Moscow sat down together to grapple with the great nuclear issues of the day, our correspondent adds.

Iran obstacle

The US is said to be interested in developments in areas including recycling nuclear fuel, while Russia wants to establishing an international nuclear fuel storage facility and have access to the lucrative US market for nuclear materials.

The agreement will allow US and Russian companies to form joint ventures in the nuclear sector and will facilitate the transfer of nuclear material between the two countries, officials said earlier.

Co-operation on nuclear issues between Russia and the US has cooled in recent years because of disagreements over how to handle the perceived nuclear threat from Iran.

The US has similar agreements with other major economic powers, including China.

BBC