There will be a unified Formula One championship next year after Max Mosley was forced into a humiliating climbdown as president of the FIA. His influence as head of motor sport's world governing body is effectively over from today.

Formula One was facing the prospect of financial disaster after rebel teams last week threatened to form a breakaway series.

It quickly became apparent that Fota, the teams' association, was just as determined to oust Mosley from his position as to resist the severe cost-cutting measures that he attempted to impose on the sport.

Confirming what will be seen by most as a victory for the teams, Mosley said: "I will not be up for re-election now we have peace."

He claimed the rival parties had reached a compromise over the controversial spending cuts, although this still needs to be confirmed.

“There will be no split. We have agreed to a reduction of costs.

“There will be one F1 championship, but the objective is to get back to the spending levels of the early ’90s within two years.”

Bernie Ecclestone, the sport's commercial impresario who had predicted the dispute was destined for a long spell in the courtrooms, said that he was “very happy common sense has prevailed”.

Before the Paris meeting today, Mosley had insisted that he might run for a fifth term as president. Instead, he has fallen on his sword and will not take up another position within the FIA and influence events from afar.

Mosley had come under severe pressure to concede his position as the teams determined to press ahead with their breakaway plans, leaving Formula One facing the prospect of a championship without its marquee manufacturers and megastar drivers.

Eight teams — Ferrari, McLaren, BMW Sauber, Renault, Toyota, Red Bull, Toro Rosso and Brawn GP — had announced they were pulling out of Formula One late last Thursday after talks broke down over the introduction of the £40m budget cap.

The 69-year-old had announced yesterday in a letter written to FIA member clubs that he was prepared to stand again as president.

Mosley said he would defend himself and the FIA from “wholly unnecessary criticism” from “the dissident teams”.

On the opposing side today was Luca di Montezemolo, the Ferrari president and Fota chairman who has been Mosley’s main critic and the prime mover behind the rival series.

Mosley had apparently made it clear if Di Montezemolo’s approach was not antagonistic, and more conciliatory, then he would use the platform of today’s meeting to confirm that he would not run again for the presidency.

That would appear to be the case, with Mosley’s 16 years in office now drawing to a close.