Britain will pay the European Union half (£850m) of the £1.7bn surcharge it had demanded, Chancellor George Osborne has said.
Speaking after meeting European finance ministers in Brussels, he added that the deal, which means the bill will be paid in two interest-free instalments after next year's election, was "far beyond what anyone expected us to achieve".
"Instead of footing the bill we have halved the bill, we have delayed the bill, we will pay no interest on the bill and if there are any mistakes in the bill we will get our money back," he said.
Prime Minister David Cameron said: "I said we wouldn't pay £1.7 billion on December 1. We've now halved the bill and will pay nothing until next July. We're delivering for Britain."
However, Sky's Europe Correspondent Robert Nisbet says it appears the EU will still get the full £1.7bn as a result of what he said some would call "clever accounting".
Nisbet explained: "Next year there will be two instalments that will equal £850m that will be paid to Brussels by the UK and it will get its rebate in full. So far so good.
"But the following year, in 2016 it appears that Britain won't be getting all of its rebate back, it will be the rebate minus £850m.
"So in effect Britain over the next few years is still going to be paying about £1.7bn but it's going to be done in a way that spreads the pain over a couple of years."
The revelation that the 2016 rebate will be used to pay the remaining £850m has sparked a debate about whether the agreement is a good deal for Britain.
A 10 Downing Street source insisted there was "no guarantee the rebate would have applied to this" before the deal was struck, and added: "Our view is that this is a very good deal."
However, Conservative MEP Daniel Hannan suggested the devil of the deal was in the detail, saying: "The EU sticks us with a bill. Ministers double it, apply the rebate, return to the original figure and claim victory. We're meant to cheer?" he said.
"Britain is worse off in absolute terms, but a straw man has been knocked down. A prelude to how the pro-EU side will fight the referendum."
UKIP leader Nigel Farage wrote on Twitter: "Osborne trying to spin his way out of disaster. UK still paying full £1.7 billion, his credibility is about to nose dive."
Mr Osborne said that EU rules would now be changed forever "so this never happens again", saying he had got his EU counterparts to agree to changing the system for calculating adjustments to member states contributions.
The PM earlier warned there would be a "major problem" if Brussels insisted on Britain paying the bill in full.
Mr Cameron went on the offensive after a meeting with other European leaders in Finland, saying Britain would not pay "anything like" the full amount ahead of a looming 1 December deadline.
The demand was made by Brussels after a recalculation of Britain's gross national income in relation to other EU states.
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