The agreement declared both sides had reached a "common understanding" that all EU citizens will have the right to continue living and working where they reside when Britain withdraws from the bloc in 2019.
The deal, spelled out in a joint report published by the European Commission, protects the rights of those who are yet to be granted permanent residency in Britain so they can still acquire it after withdrawal.
On the contentious issue of legal jurisdiction, it said British courts would enforce the rights of EU citizens but judges could refer cases to the European Court of Justice for eight years from withdrawal.
British Prime Minister Theresa May hailed the agreement as allowing expatriate citizens caught on different sides of the Brexit divide when Britain leaves "to go on living their lives as before".
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But representatives for the estimated 4.6 million European and British citizens impacted said the proposals still left them in uncertainty -- with British expatriates especially unhappy.
"It's still not clear what the status is that the UK is giving us," she said.
Advocates for Britons living in EU countries responded scathingly to the agreement.
"This deal is even worse than we expected," said Jane Golding, chair of the British in Europe coalition.
"After 18 months of wrangling the UK and EU have sold 4.5 million people down the river in a grubby bargain that will have a severe impact on ordinary people's ability to live their lives as we do now."
The draft agreement was published ahead of a European Council meeting at the end of next week when European leaders are expected to sign off on it formally.
About 3.7 million people living in the UK are citizens of another EU country, according to the latest figures from Britain's Office of National Statistics covering the 12 months up to June 2017.
Some 900,000 Britons live in other member state countries, according to an estimate based on official data from 2010/2011.
"On citizens' rights she's got a really good deal -- far far better than I thought she'd get," said Anand Menon, professor of European politics at King's College London.
That view was echoed by colleague Jonathan Portes, professor of economics, who said it went "a considerable way towards resolving the uncertainty" hanging over those effected.
But Stijn Smismans, professor of law at Cardiff University, said progress had been modest, identifying three problematic areas.
These include ambiguity over the "settled status" EU residents will get in Britain, issues over the registration system they will use, and their long-term legal protections.
"That's still not decided," he added.