Stockholm  - Slovenia and Croatia on Wednesday signed a agreement ending a long-standing border dispute that has blocked Croatia's accession talks with the European Union.

The two country's prime ministers signed the deal in Stockholm - Sweden is the current holder of the rotating EU presidency.

The dispute centres on the obscure north Adriatic bay of Piran, and dates back to 1991 and the breakup of Yugoslavia.

Attending the ceremony in Sweden were the prime ministers of Croatia, Jadranka Kosor, Slovenia, Borut Pahor and Fredrik Reinfeldt of Sweden.

Enlargement Commissioner Olli Rehn called it "a very good day for Slovenia and Croatia, and the European Union."

Rehn said he hoped both Slovenia and Croatia would complete the ratification "without unnecessary delay," as well as that "Croatia makes the last mile in the (accession) negotiations, which are reaching the final stage."

"I am sure this is a good agreement, not only for Croatia, but also Slovenia," Croatian Prime Minister Jadranka Kosor was quoted as saying by the Jutarnji List portal. "This is a step forward which brings hope to us, our neighbours and the entire southern Europe."

"I am happy that we overcame difficulties," her Slovenian counterpart, Borut Pahor said. "We are neighbours and we will be neighbours when Croatia joins the European Union ... but even with open borders, we must know where the borders are."

According to the deal, an international tribunal is to deliver a binding verdict on the border, disputed since Slovenia and Croatia emerged from the former Yugoslavia as independent states in 1991.

The contested part of the border splits the southern lip of the Bay of Piran. As it is, Croatia has the southern end, Italy the northern and Slovenia, its entire coast in the bay, has no free access to international waters.

Whatever the eventual ruling of the arbitration body, comprised by representatives from five countries - three from the European Union and one each nominated by Slovenia and Croatia - Slovenia will in the end have access to high seas, according to the agreement.

Both parliaments still have to ratify the deal.(dpa)