MPs have agreed legislation devolving the power to set corporation tax to the Northern Ireland government following a breakthrough in the political impasse over the country's budget.

The Corporation Tax (Northern Ireland) Bill will now go before the House of Lords for further scrutiny.

It grants Stormont the power to set the corporation tax rate over most trading profits and enables the executive to reduce it to be more in line with the Republic of Ireland.

It was introduced at the beginning of the year after the Stormont House Agreement was forged on December 23 after 11 weeks of discussions.

The agreement resolved destabilising wrangles over the administration's budget and its non-implementation of welfare reforms while establishing new structures to deal with the legacy of unsolved Troubles killings.

Speaking during the third reading debate in the Commons, treasury minister David Gauke said: "I believe this legislation is vital in allowing the Northern Ireland executive greater power to rebalance the economy towards a stronger private sector, boosting employment, growth and the standard of living.

"The unique challenges faced by Northern Ireland have been recognised by both sides of the House and I welcome the efficient and effective debate so far."

Shadow treasury minister Shabana Mahmood said Labour was committed to supporting the Bill as a means of encouraging inward investment in Northern Ireland.

She added: "We have all recognised that Northern Ireland has lagged behind the rest of the UK in terms of productivity and prosperity."

But she stressed this measure would not be the whole solution, saying it needed to be part of a much wider package.

During the earlier report stage debate on the Bill, Social Democratic and Labour Party Mark Durkan (Foyle) said there were concerns that credit unions and mutual building societies wholly based in Northern Ireland could be inadvertently discriminated against due to the exclusion of financial services as a sector which qualifies.

He told MPs that credit unions paid corporation tax in relation to investments, adding: "On the basis of paying corporation tax on their investments, credit unions in Northern Ireland paid back in 2012 £3.75 million."

He went on: "This is significant money to them when you consider this is money that would purely be going back in dividends to their members. It's not going off for profit in any other way, it's not being speculatively invested in property or any dubious market activities, it is staying very much within the traditional meat and drink of credit union activity and rightly so.

"On that basis it would be perverse to treat those credit unions in the same category as a financial services corporation that may try to move in from London or Edinburgh or elsewhere to somehow artificially avail of a devolved corporation tax regime."

Mr Gauke said he understood the intent of Mr Durkan's amendment but added it may create wider risks to the Northern Ireland corporation tax regime.

The amendment was withdrawn and not pushed to a vote.

DUP MP Ian Paisley (North Antrim) said the policy is what devolution was set up to achieve, as he invited critics of power-sharing to "eat their words and hopefully choke on this Bill".

He said "It (devolution) was supposed to allow the economies that make up the United Kingdom to compete to their strengths, allow them to set their own pace of change, to be agile and to be able to compete.

"For a long time many of us argued for this change and at last we now see the legislation in print and we see it moving forward on a very positive footing.

"So those who oppose devolution or they say that nothing really changes I think today they can eat their words and hopefully choke on this Bill."

Meanwhile, Alliance MP Naomi Long (Belfast East) called for an investment in skills to go with a reduction in tax, warning that companies would not invest in Northern Ireland if the workforce was not up to scratch.

She said: "There is also a challenge I believe in terms of dealing with investment in skills, which are absolutely required if we're going to see the full benefits of any reduction in corporation tax.

"There is no point in reducing corporation tax to get new businesses to come in and invest if we do not have the skilled workers to be able to take up employment in those companies.

"Because as part of the due diligence that any company does before investment, they will look at our skills base and that will be one of the key issues."