As Iran and six western nations chalked out an outline agreement on the future of Iran's nuclear programme following days of negotiation, United States President Barack Obama hailed the accord as a "historic understanding."
Under the new deal, Iran would be required to reduce its uranium enrichment capacity in exchange for relief from economic sanctions. Also, Iran's nuclear facilities will be subject to regular International Atomic Energy Agency (IAEA) inspections, reported the BBC.
The Middle East nation will have to rebuild its heavy-water reactor in Arak so that it cannot produce any more weapons-grade plutonium.
The deal stated clearly that the U.S. and EU sanctions related to Iran's nuclear programme will be lifted in phases, but can be imposed again if Iran failed to abide by the terms of the agreement.
The deal was reached after eight days of negotiations in Lausanne, Switzerland.
The talks between the so-called P5+1 nations- the US, UK, France, China and Russia plus Germany - and Iran continued well beyond the self-imposed deadline of March 31.
The world powers and Iran will now seek to draft a comprehensive nuclear accord by June 30.