The government of Colombia and leftist rebels say they have reached a deal on land reform, one of the most contentious items in their protracted peace negotiations.

Sunday's agreement between Bogota and the leftist Revolutionary Armed Forces of Colombia (FARC) would compensate those who lost land or were displaced from their property, according to Cuban diplomat Carlos Fernandez de Cossio, whose country played host to the months-long negotiations.

The government promised to build up services and infrastructure in rural areas as it tries to end the country's long history of social and economic inequality.

"What we have agreed to in this accord will be the beginning of radical transformations in the rural and agrarian reality of Colombia, with equity and democracy," said a statement read at the end of the ninth round of the talks that began in Havana in November.

Both sides said the accord constituted a major breakthrough.

Al Jazeera's Alessandro Rampietti, reporting from the Colombian capital Bogota, said that it was the first concrete step in the peace talks that had been going on in Havana.

Political reintegration

The deal addresses one of the main issues that led the FARC to form in 1964 as a communist agrarian reform movement and launch its rebellion in Colombia.

"The deal also takes care of so-called farmer areas, where they hope to develop a more modern way of farming and creating an agriculture industry where really today there's not much," our correspondent said.

Negotiators must now reach understandings in five other areas, starting with the subject of political participation for the FARC, another highly sensitive issue.

Both sides have stressed no concessions are final until a complete peace accord is reached.

Al Jazeera's Rampietti said Juan Manuel Santos, president of Colombia, had been clear in saying that any agreement reached would then be subject to a referendum.

"But definitely today's news gives optimism for the peace process and it was much-needed," he said.

More than 100,000 people have died and millions have been displaced in the nearly 50-year-old insurgency that goes on at a low intensity even as the peace discussions continue.

Many Colombians feel the rebels must face justice for war casualties, the use of kidnappings to extort money and involvement in the illicit drug trade, the latter a charge the group has denied.

The rebels have said they are willing to "review" any "error" committed during the war, but have ruled out prosecution by a state they say they legitimately rose up against for persecuting and neglecting its own people.