The US and Russia are to cut their nuclear warhead stocks unilaterally by two-thirds over the next decade.
The announcement came in Washington where Presidents George Bush and Vladimir Putin opened a summit which they said reflected the warmth of transformed relationship between the two countries.
But clear differences over the US plans for national missile defence have to be overcome, although Mr Putin said he was willing to discuss a new strategic framework between the two countries.
Mr Bush, who was meeting Mr Putin for the fourth time, dodged questions at a White House press conference about whether he remained determined to pull out of the 1972 Anti-Ballistic Missile treaty which prohibits both testing and deployment of a nuclear defensive system.
He insisted he was prepared to continue talking to the Russians - "as partners and friends, not adversaries" - and hinted that progress could be made at the summit, which continues today.
In an important, but largely symbolic concession, Mr Bush also announced he would lift residual economic sanctions from the Soviet era, passed in 1974 to pressurise Moscow into allowing the emigration of religious minorities. But although he pledged to help develop economic relations, Mr Bush did not mention Russia's hope to win accession to the World Trade Organisation or the possibility of debt forgiveness.
Both countries will strengthen their co-operation to prevent terrorist access to weapons of mass destruction and safeguard biological and nuclear weapons. And they issued a joint appeal to the Israelis and Palestinians to resume peace talks.
Mr Putin expressed sympathy and solidarity with Mr Bush over the events of September 11th and, in perhaps the most striking mark of Russia's new willingness to co-operate with America, dismissed suggestions that he was concerned by the offer from Tajikistan that the US could use its air bases.
Asked whether he was concerned at the seizure by the Northern Alliance of Kabul, Mr Bush said the Alliance had "made clear it had no intention of occupying Kabul" and insisted there would be no preferential treatment at the table for them.
Mr Putin vehemently denied reports that the Alliance, which is largely armed by Moscow, had executed prisoners.
The US and Russia have 7,000 and 6,000 nuclear warheads respectively with Russia already committed for cost reasons to cutting its stocks unilaterally. Mr Bush said he would reduce the US stockpile to between 1,700 and 2,200, a reduction he said was justified by US needs and the strategic realities.
Neither country wants a confrontation over the 1972 ABM treaty despite strong differences over the US missile defence project. A temporary solution which preserves the treaty in large part while allowing testing to continue is clearly the least embarrassing to both sides and may yet emerge today, although the US will want to make it clear that it intends not only to test but to deploy its defence system. Today they move to the more relaxed summit session in Crawford, Texas, where Mr Bush hopes to give his guest a flavour of life on the range.
