The Federal Government has agreed major concessions with the mining industry in a redesign of its controversial super profits tax.

The changes, announced by Prime Minister Julia Gillard this morning, include reducing the headline rate of the tax from 40 per cent to 30 per cent.

Tax renamed the Minerals Resources Rent Tax

Tax renamed the Minerals Resources Rent Tax Will only apply to iron ore and coal

Will only apply to iron ore and coal Iron ore and coal will now be subject to a new tax at a rate of 30pc instead of the original 40pc

Iron ore and coal will now be subject to a new tax at a rate of 30pc instead of the original 40pc Tax will kick in at the government bond rate plus 7 per cent, which would be around 12 per cent

Tax will kick in at the government bond rate plus 7 per cent, which would be around 12 per cent Oil and coal seam gas to be rolled into the existing Petroleum Resources Rent Tax and taxed at 40pc

Oil and coal seam gas to be rolled into the existing Petroleum Resources Rent Tax and taxed at 40pc Changes mean the Government loses $1.5 billion of expected revenue

"We've been stuck on this question as a nation for too long," Ms Gillard told a press conference in Canberra this morning.

"Today we're moving forward together... It's also essential we have a stable and a coherent Government and a positive basis for trust, and I believe we have established that this week."

Today's agreement, after intensive discussions with Rio Tinto, Xstrata and BHP Billiton in Canberra this week, ends a two-month brawl with the resources sector which contributed to Kevin Rudd's ousting as prime minister.

Ms Gillard was keen to distance the rebranded tax regime from the old resources super profits tax.

"There will be a Government profit-based tax regime, but there will be no resources super profit tax," she said.

"It will maintain Australia's standing as a competitive and attractive destination for investment."

Treasurer Wayne Swan was quick to heap praise on Ms Gillard for securing the deal.

"I think it's fair to say that her intervention changed the tone of this debate and has led to this breakthrough," he said. "It is a better tax for the consultation, it is a better tax for the negotiation."

The revamped tax will now only apply to a few hundred companies instead of the thousands that would have been liable under its predecessor.

Former BHP chair Don Argus will head a consultation panel with Resources Minister Martin Ferguson to hammer out the final details of the deal.

BHP Billiton and Rio Tinto have issued statements welcoming the new tax proposal, but they say there is still much work to be done on its design before it takes effect.

Minerals Council of Australia chief executive Mitch Hooke called a the deal "a positive outcome for Australia and the Australian minerals industry" but said there was still unfinished business" to be worked through.

The CFMEU mining union has applauded the deal, with national president Tony Maher calling it a "huge win" for the community.

The Government says the price of iron ore has increased by 400 per cent and black coal by 200 per cent since the beginning of the mining boom.

The exploration rebate has been scrapped as has the measure that would have seen the Government share 40 per cent of the risk of projects.

Companies can also use the market value for their assets in assessing their taxable income, an area which was a key concern for the miners.

The tax was supposed to fund a 2 per cent cut in the company tax rate, but the changes now mean there will only be a 1 per cent cut.

However the boost in compulsory superannuation contribution from 9 to 12 per cent will remain.

The resolution of the stand-off with the big miners is likely to increase speculation that an election will be called soon.

The legislation for the tax still needs to go through Parliament but will not be introduced until after the election, and the tax is not due to start until 2012.

The Federal Opposition has vowed to block the tax but the deal with the industry is likely to put it under pressure to state whether it would repeal the tax if it came to office.

Deputy Opposition Leader Julie Bishop has accused the Government of a backflip.

"What was most disturbing about that press conference was seeing the co-authors of the original bad tax policy still spinning the same lines about getting the balance right and consulting further," she told ABC2 News Breakfast.

"This just adds to the uncertainty. Nothing has been achieved at all other than the Government's backflipped on a number of core issues."

Queensland mining magnate Clive Palmer was unmoved by the change to a 30 per cent tax rate and urged the opposition to stand firm in its opposition to the tax.

"These people just don't seem to learn, that's not how you grow the economy," he told Sky News. "A tax never created any jobs or provided an income for any family."

Greens Leader Bob Brown says the Government has made a "monumental backdown" which has served the interests of the big miners.

"In the future this is going to strip billions out of budgets, which would be going to the welfare of all Australians," he said.

Senator Brown says the Greens will scrutinise the legislation when it comes before Parliament.