Doctors leaders won concessions from the Government yesterday over the new contract for hospital consultants which has been the subject of a bitter dispute for more than eight months.

The Department of Health reached an agreement with the British Medical Association (BMA) only three weeks after the two sides traded insults and the consultants threatened to ballot on industrial action.

John Reid, the Health Secretary, refused to meet the consultants after his appointment last month. He said he saw no need to discuss the contract, which offered them an overall 15 per cent pay rise over two years in return for extra work.

But yesterday he said he had been prepared to "go the extra mile" to resolve the dispute. "I am very pleased to announce that both sides have been able to make a sensible compromise to reach an agreement without renegotiating the previously agreed deal," he said.

The BMA's negotiators now have to sell the revised contract to the association's consultants committee and then, if it is approved, to the 40,000 consultants and specialist registrars in England in September.

Last October, consultants rejected by two to one a deal which included curbs on private practice, compulsory evening and weekend working and extra powers for managers.

Family doctors, nurses and other staff have agreed new pay deals. Consultants are the last group to settle and the new contract is seen as crucial to delivering a government pledge to cut waiting times to a maximum of six months by 2005.

Under the revised deal, evening and weekend work will be voluntary and sessions will be three hours instead of four. The independent appeals procedure will be strengthened and there will be "clarification" on managerial control. Consultants who wish to practice privately will still have to offer their services first to the NHS, to be paid at NHS rates, but NHS sessions will be cut from eight to four hours.

Paul Miller, chairman of the BMA consultants committee, said: "We have secured improvements on most of the points that concerned us. I am hopeful consultants will feel this is an improvement."

Starting salaries will increase from £52,000 to £63,000 and top basic pay will rise from £68,500 to £85,250. Discretionary points and awards will take top earnings to more than £130,000.