“Was there really a protest here or was it just a bad dream?” joked Fadi Abu Karim, 34, an accountant, gazing at the traffic-filled streets and full car park that a few days ago had housed a tent city that was occupied by Hezbollah supporters and their allies.

Cars, shoppers and diners have returned to central Beirut after the feuding leaders of Lebanon struck a deal this week to end a 19-month political deadlock and a mass sit-in by opposition protesters. The rows of coiled razor wire, concrete blocks and white canvas tents were removed and businessmen smiled as they reopened restaurants and cafés, amid predictions of a bumper tourist season.

The sense of relief in Lebanon is palpable. One week ago many feared that the country was sliding inexorably into a new civil war after west Beirut was seized by Hezbollah and the bloodiest sectarian battles since the end of the last conflict in 1990.

The heady optimism will peak tomorrow with a lavish ceremony in which Arab and foreign dignitaries will attend a parliamentary session to elect General Michel Suleiman, the commander of the Lebanese Army, as head of state, filling a presidential vacuum that has existed since November.

The city centre, the commercial and tourist hub of Beirut, became a ghost town when the opposition began its sit-in in December 2006 in an effort to topple the Western-backed Government. The Government proved tenacious and, as the months passed by the sprawling encampment, which spread over two squares, became as much of an embarrassment to the opposition as it was an irritation to residents of Beirut.

The breakthrough came on Tuesday when Lebanese leaders, flown to Qatar and corralled in a hotel, reached an agreement on the shape of a national unity government, an electoral law and the election of General Suleiman. As rival politicians kissed cheeks and slapped backs in Qatar, Beirut prepared to reopen after 18 months.

In the Scoozi restaurant dusty chairs were stacked on equally dusty tables. Naif Fakih, a manager at the restaurant, was fielding congratulatory telephone calls from customers and friends. “I was so happy to hear the news. I could not believe it,” he said.

Some establishments - particularly chain restaurants, which had more financial backing - had stayed open as a gesture of defiance against the crippling effects of the sit-in.

“We never closed and we kept all our staff,” Hussam Sweid, the manager of TGI Friday, said. “We are looking forward to a good summer.”

Lebanon relies heavily on summer tourism as expatriate Lebanese visit families, and Arabs from the Gulf swap the blazing heat of the desert for the cool air of the Lebanese mountains - and Beirut's frenetic nightlife.

The past two years were ruined by violence: last summer the Lebanese Army was locked in a three-month battle with a group in north Lebanon linked to al-Qaeda that left more than 300 people dead and in 2006 Hezbollah and Israel fought a month-long war that killed more than 1,000 Lebanese and caused £3.5 billion of damage.

On Thursday night crowds descended on central Beirut, sipping coffeeor wandering the cobbled streets around Nijmeh Place, home of Lebanon's parliament. Even Fouad Siniora, the Prime Minister, took a stroll around the city centre, shaking hands and greeting wellwishers. Mr Siniora has spent most of the past 19 months holed up in the Grand Serail, the hilltop Ottoman-era barracks that serves as the offices of the Government. The threat of assassination meant that he and several of his Cabinet colleagues were forced to work and sleep there.

The tenure of Mr Siniora is drawing to a close, however. His aides have said that he will not seek reappointment as head of the next government when negotiations on its composition begin next week.

The likely candidate is Saad Hariri, the head of the Future Movement, Lebanon's largest Sunni party. Mr Hariri is the son and political heir of Rafik Hariri, the former Prime Minister, whose assassination in February 2005 sparked the events that led to the political crisis.

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