Under the terms of the new deal, the PFA will receive pounds 750,000 per year for five years, with a further pounds 600,000 a year allocated by the clubs to spend on mutually agreed projects.
The first payment, replacing the pounds 560,000 the union received last season, will go on benevolent packages, insurances and player education. The second sum will be allocated following discussions between the clubs and the PFA, although the precise process has yet to be determined.
The new package was agreed following a 30-minute discussion by chairmen and representatives of all 72 clubs in London. The Football League secretary, Andy Williamson, said: "Obviously we are pleased that this saga has now been brought to a satisfactory conclusion. It means that supporters and our commercial partners can be assured that there will be no disruption to the League's programme."
The PFA had balloted its members on strike action after the clubs scrapped the long-running tradition of paying the union a 10 per cent levy from television screening rights. This season the League began a five-year, pounds 125m TV deal with BSkyB, and the PFA chief executive, Gordon Taylor, initially demanded that the payment be restored.
However, after the players from the 72 clubs made their vote - understood to be overwhelmingly in favour of industrial action - Taylor pulled back from the brink in order to begin further negotiations. Those talks clearly bore fruit, although Williamson stressed that there had been "compromise" on both sides.
The Football League president, Gordon McKeag, was yesterday served notice to quit after clubs overwhelmingly backed a call for a radical overhaul of the League's structure.
The Ipswich chairman David Sheepshanks, Ron Noades of Crystal Palace, Jonathan Hayward of Wolves and Oldham's Ian Stott proposed the change which will see the seven-man board replaced by a new nine-man body.
While McKeag will keep his title until he steps down next summer, he will immediately relinquish his position as board chairman if the move is agreed at an emergency general meeting of clubs next month.
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