With the summit due next week, the deal had stumbled on Russia's opposition to what it branded "virtual cuts" - the Pentagon's insistence that U.S. nuclear warheads could be stored rather than scrapped.

Moscow demanded the destruction of decommissioned warheads, while the Pentagon said storing them would allow the United States to "reconstitute" its arsenal should new threats emerge from "rogue states" like Iraq, Iran and North Korea.

On Monday, U.S. President George W. Bush announced he would sign a four-page arms reduction treaty with Russian President Vladimir Putin during a summit in Moscow and St Petersburg which gets under way on May 23.

"A lot of the credit is due really to the Russian side for concluding that the road we were travelling was not necessarily going to get us to an agreement by the summit," said the U.S. official, who asked not to be identified.

"They decided analytically that it was only going to be possible to agree on the kind of measures the two presidents had

talked about, so a lot of these other issues...they decided were

not central to the objectives of their president.

"That enabled us to respond very quickly...(and agree on the

main issue of) how many warheads are really available to the sides at any particular point in time over this 10-year period."

Had both sides refused to compromise it would have been "entirely possible we would not have reached agreement in time for the summit", he said.

COLD WAR RIVALRY

Bush and Putin first agreed to drastically reduce their nuclear warhead stockpiles at a summit last November hailed as the final nail in the coffin of the Cold War rivalry that had divided them for five decades.

The announcement followed Putin's stalwart support for the war on terrorism launched by Bush after the September 11 hijacked airliner attacks on the United States that killed some 3,000 people.

But arms talks had stumbled on the storage issue, despite a flurry of meetings between top arms control negotiators Georgy Mamedov of Russia and John Bolton of the United States.

The two men met again yesterday and put the finishing touches to the text of the arms accord. They also worked on a separate political agreement on their future strategic relationship, notably including joint work on missile defence - an issue that had previously also divided the two nations.

The senior U.S. administration official said the arms cuts breakthrough was emblematic of changing U.S.-Russian relations.