Rushdie said last night as he left the Foreign Office after a briefing by the minister Derek Fatchett, that it appeared his ordeal under sentence of death had ended. "It looks like it's over," he said. "The fact is that after 10 years an extraordinary thing has been achieved." Asked what the diplomatic move meant to him, he said: "It means everything, it means freedom."
The agreement, which had been under secret negotiation between the two governments since early this year, was unveiled by Robin Cook, the Foreign Secretary, and his Iranian counterpart, Kamal Kharrazi, after talks in New York on the margins of the United Nations General Assembly.
It ends nearly 10 years of diplomatic chill between Britain and Iran. Both sides agreed on the normalisation of diplomatic relations and the imminent exchange of ambassadors. A visit by a British minister to Iran is expected shortly.
Rushdie, 51, has been forced to look for assassins around every corner since Valentine's Day 1989, when the late Ayatollah Khomeini issued the fatwa that called upon Muslims to kill the author as punishment for allegedly offending Islam in his book The Satanic Verses.
The threat to Rushdie's life may not be completely removed. Britain has long accepted that the Iranian government does not have the power to erase the fatwa, which still has the status of an immutable religious edict. Mr Cook, however, insisted that in the light of yesterday's statement by Mr Kharrazi, the level of danger for the author was "very seriously diminished".
Crucially, Mr Kharrazi said that his government has "no intention, nor is it going to take any action whatsoever to threaten the life of the author of The Satanic Verses or anybody associated with his work, nor will it encourage or assist anybody to do so".
There was also a reference in the statement to the $2m (pounds 1.2m) bounty that still remains on the head of Rushdie, offered by the militant Kordad Foundation in Iran. Mr Kharrazi said that the Iranian government "disassociates itself from any reward which has been offered in this regard and does not support it" - but he stopped short of condemning it.
Mr Cook insisted that Mr Kharrazi's words amounted to "very much a bolder statement in relation to the bounty than we have had before from the Iranian government".
He hailed his agreement with Mr Kharrazi as "historic", while conceding that some degree of security protection for the author may still be necessary because of the danger of a freelance assassination attempt.
Mr Rushdie has been under permanent protection by officers of the Special Branch; the cost of guarding him has been put at pounds 1m a year. At one stage, he was persuaded by friends to disguise himself in public by wearing a wig.
At his first face-to-face meeting with a British foreign secretary in February this year, Rushdie spoke of his existence in the shadow of terror. "I have tried as far as possible to live without fear. I've tried to get on with my life," he said. The author has made occasional public appearances in recent years.
In the first year of the fatwa, Penguin Books in London, the publisher of The Satanic Verses, received numerous terrorist warnings. The Norwegian publisher of the book was also injured after an attack by gunmen.
Dr Ghayasuddin Siddiqui, leader of the self-styled Muslim parliament in Britain, said last night that Rushdie was still in danger from Islamic extremists. "I don't think the Iranian government can do anything at all. They can make promises, but that is all they can do," he said.
Iran has increasingly voiced concern in recent months that the fatwa issue was becoming an obstacle to its hopes of improving diplomatic links with London and with Washington. Britain, for its part, has been searching for a resolution that would allow a resumption of ties increasingly considered to be of critical strategic importance in the Gulf region.
In addition to oil and trade interests, Britain is anxious to have influence in the area, in part because of the balance Iran may provide against its neighbour, Iraq. Iran's proximity to Afghanistan makes a resumption of diplomatic contacts urgent. Drugs are also an issue, because a high percentage of heroin entering Britain is believed to originate in Afghanistan.
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