Condoleezza Rice announced today a breakthrough deal that will fully re-open Gaza border crossings for the first time since September.

The US Secretary of State had prolonged her trip to the Middle East last night in the hope of breaking the deadlock over border controls at Gaza, which the Palestinians had claimed were strangling the strip's economy.

"I am pleased to be able to announce today that Israel and the Palestinian authorities have approved an agreement on access," Dr Rice told a news conference today in Jerusalem after all-night talks.

She said the Rafah border crossing between Gaza and Egypt was targeted for re-opening on November 25. Palestinians will be able to move between Gaza and the West Bank in convoys, and construction is set to begin on a new Gaza seaport, she said.

Israel had conditioned the opening of the Rafah terminal between Gaza and Egypt on third-party monitoring of traffic, saying it feared arms smuggling across the border. But the Palestinians had balked at the idea of such close oversight.

An Israeli Defence Ministry source said that a compromise was reached whereby Israeli and Palestinian security officers will sit in a control room a few miles away from Rafah, watching goings-on at the terminal via video relay.

Dr Rice said she understood Israel’s security concerns. "Our commitment to security is strong as always," she said. "Progress like today’s agreement cannot continue unless there is progress in fighting terror."

The Palestinians have said that Israel’s continued control over the strip, from which it evacuated 8,500 Jewish settlers in the autumn, was killing off trade.

Israel insists that it cannot risk suicide bombers, gunmen and weapons passing into Israel and the West Bank. Palestinians say that the restrictions highlight Israel’s continued occupation of the Gaza Strip.

James Wolfensohn, a former president of the World Bank and a Middle East envoy, this week echoed Palestinian complaints that Gaza risked becoming a "giant prison" unless Israel eased the border controls.

With fruit and vegetables accounting for nearly 50 per cent of Gaza’s exports, the scene at the Karni crossing - which controls the flow of goods - is bleak. An endless queue of lorries waiting to be summoned by Israeli guards using loudspeakers.

After four days of queueing, Omar Ilatrash said that his truckload of cucumbers was spoiled: "If I have to spend another day here, two at the most, the tomatoes will be finished," he told The Times. "I’ll just go and dump them in a field."

From 50 truckloads a day before disengagement, barely a dozen pass through Karni into Israel now, compared with 300-plus in the other direction.

Dr Saleh Abdel Shafi, a Gaza economic analyst, said that it would be economically devastating for Gaza if the first harvest of the 3,000-plus settler greenhouses was wasted.

"Without solving the issues of access, no outside investors will come," Dr Shafi said. "Who will sink money into a place where you have difficulty getting goods and people out?"

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