United will pay Everton a guaranteed £20m, with that sum rising by as much as £7m, according to the 18-year-old striker's appearances and achievements.

Rooney has signed a six-year contract which will tie him to Old Trafford until 30 June 2010.

"I'm excited to be joining a club as big as Manchester United. I feel this can only improve my career," he said.

Sir Alex Ferguson said he was delighted to sign a player who he claimed last week would make United's squad as strong as that which won the European Cup in 1999.

"I am very excited. I think we have got the best young player this country has seen in the past 30 years," he said.

"Everyone is delighted by this signing."

Everton will receive half of the £20m fee immediately, with the other half due on 1 August 2005.

A further £3m will follow if Rooney is still a United player by 30 June 2007.

Further payments could follow based on whether he renews his contract, and also depending on his appearances at international level.

Rooney's representatives, Pro-Active Sports Management could be paid up to £1.5m - depending on the player's loyalty to United - for their role in the deal.

We are not dealing with any normal 18-year-old

BBC Sport's Alan Hansen Hansen's column in full

The England star, who suffered a broken metatarsal bone in Euro 2004, passed a medical earlier on Tuesday.

Newcastle had also wanted Rooney, who handed in a transfer request at Goodison Park on Friday after rejecting a club-record contract offer from Everton.

Bill Kenwright, the Everton chairman, met United chief executive David Gill for talks on Monday as the two clubs met for a Premiership game at Old Trafford, which finished goalless.

The big fee will be a boost to Everton's finances and will help reduce debts estimated to be in the region of £30m.

But given the last-minute nature of the transfer, it is not clear whether the Toffees will be able to spend any of the cash, or bring in replacements for Rooney to improve their squad, before the transfer window closes.