Iran deal reached, Obama hails step towards 'more hopeful world'

US President Barack Obama hailed a step towards a "more hopeful world" and Iran's President Hassan Rouhani said it proved that "constructive engagement works". But Israel pledged to do what it could to halt what it called an "historic surrender".

The agreement will now be debated in the US Congress, but Obama said he would veto any measure to block it.

"This deal offers an opportunity to move in a new direction," Obama said. "We should seize it."

Under the deal, sanctions imposed by the United States, European Union and United Nations will be lifted in return for Iran agreeing long-term curbs on a nuclear program that the West has suspected was aimed at creating a nuclear bomb.

Iran will mothball for at least a decade the majority of its centrifuges used to enrich uranium and sharply reduce its low-enriched uranium stockpile.

The agreement is a political triumph for both Obama, who has long promised to reach out to historic enemies, and Rouhani, a pragmatist elected two years ago on a vow to reduce the isolation of his nation of 80 million people.

"Today is the end to acts of tyranny against our nation and the start of cooperation with the world," Rouhani said in a televised address. "This is a reciprocal deal. If they stick to it, we will. The Iranian nation has always observed its promises and treaties."

Delighted Iranians danced in the streets of Tehran, whole motorists sounded car horns and flashed victory signs in celebration after the announcement a deal they hope will end years of sanctions and isolation.

Alongside the main deal, the United Nations nuclear watchdog, the International Atomic Energy Agency, announced an agreement with Iran to resolve its own outstanding issues by the end of this year.

The main deal depends on the IAEA being able to inspect Iranian nuclear sites and on Iran answering its questions about possible military aims of previous research.

For Iran, the end of sanctions could bring a rapid economic boom by lifting restrictions that have shrunk its economy by about 20 percent, according to US estimates.

The prospect of a deal has already helped push down global oil prices because of the possibility that Iranian supply could return to the market.