Max Mosley and Bernie Ecclestone have agreed a truce to end the bitter feuding that threatened to tear apart Formula One and The Times can reveal that the pair will work together on a radical overhaul of the sport.

The first evidence of the thaw in relations came yesterday - with the British Grand Prix taking place at Silverstone on Sunday - as Ecclestone endorsed Mosley’s blueprint for a new Formula One agenda. The two have attacked each other for weeks in the wake of Mosley’s refusal to resign as president of the FIA, the sport’s governing body, after revelations about his private life. Now the friends of 40 years have reached an agreement.

“The bottom line is simple - we have moved to patch up our differences,” Ecclestone said. A spokesman for Mosley did not disagree, saying: “It is a very interesting moment in the trajectory of this story.”

In a letter to Formula One team chiefs, Mosley argued that the championship is becoming so expensive as to be unsustainable. “The major manufacturers are employing up to 1,000 people to put two cars on the grid,” Mosley wrote. “This is clearly unacceptable at a time when these companies are facing difficult market conditions.” He has asked the teams to write a new set of technical regulations, to come into force from 2011, that will eventually cut multimillion-pound operating budgets by 50 per cent and cut cars’ fuel consumption by 50 per cent, while also maintaining top speeds and improving the overall spectacle by making overtaking easier.

In a bid to knock heads together, Mosley has asked the teams to come up with new rules in three months; if a majority of them fail to agree on a new format, the FIA will do it for them.

Ecclestone welcomed an initiative that previously he might have seen as encroaching on his territory. He said that getting the teams to write the technical regulations themselves had always been an ambition of his and he supported the move to a cheaper, more sustainable racing series. “I am happy that the FIA has taken the initiative to allow the teams to write the regulations,” he said. “They will be able to control their expenditure. What Max put in the letter is correct - it’s a little cranky that it takes 1,000 people to put two cars on the grid.”

The outbreak of peace between the sport’s two big hitters means that the scenarios talked of in recent weeks, including the possibility that the Formula One teams might set up a breakaway racing series, will not happen.

The new political reality also means that the chances of agreement on the future of the sport between Ecclestone, as commercial rights holder, and Mosley, an FIA president with a reformist agenda, are greatly improved.

Mosley, who begins an action over invasion of privacy in the High Court against the News of the World on Monday, is determined to remain in his post until the end of his mandate in October next year. After joining many other leading figures inside and outside Formula One calling for Mosley to resign, amid lurid disclosures about his sadomasochistic bondage sessions with prostitutes, Ecclestone now appears to have accepted this.

It is thought that a recent meeting between Ecclestone and Luca di Montezemolo at the Ferrari president’s home in Italy may have helped to ease tensions. Montezemolo has always been close to Mosley and the FIA.