Britain and the EU clinched a deal on Monday to settle their toxic dispute over Northern Ireland trading rules in a turning point after years of post-Brexit tensions.

Rishi Sunak, UK prime minister, and Ursula von der Leyen, European Commission president, sealed the agreement in the shadow of Windsor Castle, with both talking of a “new chapter” in relations.

Sunak and von der Leyen hope the deal to smooth trade between Northern Ireland and the rest of the UK will end years of grim post-Brexit ties between London and Brussels.

“We have made a decisive breakthrough,” Sunak said at a press conference with von der Leyen, as the two hailed an agreement to reform the so-called Northern Ireland protocol, dubbed “the Windsor framework”.

The protocol was established to prevent a hard border on the island of Ireland. But it is hated by Northern Ireland’s Democratic Unionist party because it created a trade barrier for goods travelling from Great Britain into the region, which remains part of the EU’s single market for goods.

Sunak began the task of selling the new deal to Northern Ireland’s DUP and Eurosceptic Tory MPs on Monday, with his high-stakes gamble showing early signs that it could limit the size of a rebellion.

Steve Baker, Northern Ireland minister and self-described “hard man of Brexit”, scotched rumours he might quit, calling the pact “a really great deal”. David Davis, former Brexit secretary, also backed the agreement.

Boris Johnson, the former prime minister who agreed the protocol with Brussels, was not in the House of Commons to hear Sunak. His allies said he was considering how to respond to the deal.

Sunak said MPs would “have a vote at the appropriate time”.

Many Eurosceptic Tories may take their lead from the DUP, which is considering whether to accept the agreement and end its boycott of the region’s assembly at Stormont. The party has refused to attend in protest over the operation of the protocol.

Sir Jeffrey Donaldson, DUP leader, told a packed House of Commons that “significant progress” had been made across a number of areas but there remained “key issues of concern”.

Ian Paisley, another DUP MP, told the BBC that the reforms did not “cut the mustard”, but Sunak said the unionists needed “time and space” to decide whether to return to the power-sharing executive.

The British prime minister claimed he had secured fundamental reforms to the protocol, part of Johnson’s 2019 Brexit deal and a focal point of tensions. The reforms went further than many Tory MPs had expected.

Von der Leyen praised what she said was “a very constructive attitude from the very beginning” in the talks with the UK, adding that the two sides were “close partners, shoulder to shoulder, now and in the future”.

Sunak maintains the deal will slash trade bureaucracy and reduce the role of EU law and the European Court of Justice in Northern Ireland, as well as giving the region’s assembly at Stormont a say over new EU rules.

The Brexit treaty will be recast to include a new “emergency brake”, allowing the UK, at the request of 30 members from at least two parties in the Northern Ireland legislative assembly, to oppose updates to new EU goods law in exceptional circumstances.

The UK will ditch legislation introduced by Johnson to unilaterally rewrite the protocol.

The EU, in turn, will restart co-operation with Britain under the €95bn Horizon science project, with von der Leyen hailing “good news for scientists and researchers” in the EU and UK.

France and Britain are also expected to step up efforts to curb cross-Channel migration in small boats.

The signing of the deal was accompanied by controversy as von der Leyen included a visit to see King Charles as part of her itinerary, sparking claims that Sunak had allowed the monarch to be dragged into the political arena.

Although Brussels insisted the meeting was unconnected to the protocol, Baroness Arlene Foster, former leader of the DUP, said the move was “crass” and would “go down very badly” in Northern Ireland.

Sunak said Monday’s agreement would make it easier to ship items including pets, medicines, parcels, plants and sausages between Great Britain and Northern Ireland and end “any sense of a border in the Irish Sea”.

A “green lane” with significantly reduced checks would be created at Irish Sea ports for goods destined to stay in Northern Ireland, while a “red lane” would be created for goods continuing into Ireland and the single market.

Downing Street said the deal would ensure Northern Ireland would have the same food, drink and medicines as the rest of the UK.

But UK officials conceded Monday’s agreement would not remove EU law or European Court of Justice jurisdiction from Northern Ireland, as demanded by some Brexit hardliners.

Insiders on both sides said Brussels had not moved substantially on the ECJ’s role in enforcing the protocol, although the UK is expected to argue that the amount of EU law being enforced will in effect have been reduced.

Commenting on the deal on Monday, US president Joe Biden stated: “I am confident the people and businesses of Northern Ireland will be able to take full advantage of the economic opportunities created by this stability and certainty.

“Northern Ireland can accomplish the extraordinary when its leaders work together in common cause. And I hope — as we all do — that Northern Ireland’s political institutions are soon back up and running. Those institutions embody the principle of devolved, power-sharing, representative government at the core of the Good Friday Agreement.”

Additional reporting by Andy Bounds in Brussels, Peter Foster and Robert Wright in London, and James Politi in Washington