"As a result of the negotiations, which also involved the United Nations, aid agencies and the high command of the peacekeeping force ECOMOG, an immediate ceasefire has been agreed among the combatants," Ghana's deputy foreign minister, Mohamed Ibn Chambas, revealed after drawn-out talks.
Liberia's ruling council had also agreed that ECOMOG should cordon off the Barclay Training Centre barracks. Loyalists of the Krahn militia warlord, General Roosevelt Johnson, were holed up there with thousands of refugees and scores of hostages.
The barracks have been the target of shelling since fighting erupted a week ago when Liberia's coalition government tried to arrest Johnson on murder charges.
Yesterday, large explosions were heard in the city and Government troops, rebels and thieves exchanged heavy weapons fire on the streets of Liberia's seaside capital.
The United States has evacuated more than 1,000 frightened foreigners since Tuesday.
Witnesses said two children were killed and 17 people were wounded by mortar fire at the barracks yesterday morning. Overnight shelling killed seven people in a barracks church.
Government troops - many of whom are former rebels brought into the military when a peace accord was reached last year - were reported ransacking and taking over houses.
The United Nations had announced that it would attempt to get nearly 100 of its workers out of the capital by boat. A US spokesman said a British merchant ship was offshore and ready to join the operations.
Up to 20,000 people, including foreign diplomats, missionaries and Liberians, had sought refuge in the US embassy compound and UN offices since fighting broke out between rebels and government troops last Saturday.
The violence has taken its toll on Monrovia. Food and medicine are scarce and last night's news will bring fresh hope amid the desolation.