The world's richest countries - the G8- have agreed to write off the $40bn (£22bn; 33bn euros) debt owed by 18 mainly African countries.
The package was agreed by G8 finance ministers meeting in London ahead of July's summit in Scotland.
Anti-poverty campaigners have also welcomed the deal - but say they want more nations to benefit.
The UK, which holds the G8 presidency this year, also hopes to secure a large increase in development aid to the poorest countries.
Announcing the deal, UK Chancellor Gordon Brown said now was "not a time for timidity but a time for boldness".
Under the agreement, the World Bank, the International Monetary Fund and the African Development Fund will immediately write off 100% of the money owed them by 18 countries - $40bn in total.
It will save those countries a combined total of $1.5bn a year in debt repayments.
Nine other countries should benefit from 100% debt relief within 12-18 months, Mr Brown said. After that, 11 more countries could be eligible to join if they met targets for good governance and tackling corruption.
The total package - which must be approved by the lending institutions - could be worth over $55bn.
Ugandan Information Minister Nsaba Buturo - whose country will benefit immediately - told AFP the decision was "commendable", but added: "It's something that should have been done yesterday."
Ethiopia's Finance Minister Sofian Ahmed said his country's debt cancellation was "very encouraging", assuming there were no strings attached.
Ministers in Nicaragua and Zambia said they would now be able to boost health and education programmes.
Archbishop Desmond Tutu, a veteran of the fight against apartheid in South Africa, said: "It is a splendid start and one hopes that they will, from here, go on to cancel all debt for most of the countries - I gather it is about 62 countries - who are heavily indebted."
He acknowledged the continent had seen many corrupt leaders who had squandered aid but he told BBC News 24: "Remember the West had a hand in promoting some of those leaders because it suited them at the time."
Singer Bob Geldof, who has organised the global Live 8 concerts to highlight global poverty and put pressure on the G8 to act, hailed the deal as a "victory", adding: "This is the beginning."
He said: "Tomorrow, 280 million Africans will wake up for the first time in their lives without owing you or me a penny from the burden of debt that has crippled them for so long."
But he added: "The end will not be achieved until we have the complete package... of debt cancellation, doubling of aid, and trade justice."
Romilly Greenhill of ActionAid said it was "very good news for people in the 18 countries that will immediately benefit.
"But it will do little to immediately help millions in at least 40 other countries that also need debt relief."
A spokesman for the UK's Jubilee Debt Campaign said while there was "more work to be done," the deal went much further than expected following previous World Bank and IMF meetings.
The debt relief plan was adopted after Britain managed to secure US backing on Friday.
Disagreements remain over how much extra development aid poor countries should get and how to fund it.
The US has rejected the UK's proposed International Finance Initiative, which aimed to raise $50bn a year by selling bonds on world capital markets.
France wants an international aviation tax to fund the extra aid.
The G8 countries are the United States, Canada, Britain, France, Germany, Italy, Japan and Russia.
IMO, Russia should be considered a poor country...
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