* Accord to bring "radical transformation" in rural areas
* Talks will move on to issue of FARC political participation
* Negotiations will resume June 11 in Havana
Colombia and the Marxist-led FARC rebels have reached agreement on the critical issue of agrarian reform, the two sides said on Sunday in what appeared to be a major step forward for the peace process aimed at ending their long war.
They said the accord called for the economic and social development of rural areas and providing land to the people living there, which addresses one of the main issues that led the FARC, or Revolutionary Armed Forces of Colombia, to form in 1964 as a communist agrarian reform movement and launch its insurgency.
The government promised to build up services and infrastructure in rural areas as it tries to end the country's long history of social and economic inequality.
"What we have agreed to in this accord will be the beginning of radical transformations in the rural and agrarian reality of Colombia, with equity and democracy," said the statement, which was read at the end of the ninth round of the talks that began Nov. 19 in Havana.
The agreement was the most hopeful development yet in the peace process, but many potential obstacles remain, starting with the next agenda item - the delicate subject of political participation for the FARC.
More than 100,000 people have died and millions have been displaced in the war that is now Latin America's longest-running insurgency and goes on at a low intensity even as the peace discussions continue.
Many Colombians feel the rebels must face justice for war casualties, the use of kidnappings to extort money and involvement in the illicit drug trade, the latter a charge the group has denied.
But criminal charges and jail time could exclude many FARC leaders from taking part in politics.
The rebels have said they are willing to "review" any "error" committed during the war, but have ruled out prosecution by a state they say they legitimately rose up against for persecuting and neglecting its own people.
Other remaining agenda points include the logistics of ending the conflict, the drug trade, compensation for victims and the implementation of the final accord.
President Juan Manuel Santos, who recently hinted that he plans to run for re-election in 2014, has said he wants the talks ended this year.
Santos initiated the peace talks last year on a bet the FARC had been so weakened by the government's 10-year, U.S.-backed offensive against the group that its leaders are ready to negotiate an end to the fighting.
Three previous peace attempts, the last ending in 2002, have failed.
The rebels have been pushed into remote corners of the country but are still able to attack oil and mining operations that are fueling Colombia's economic growth.
The war has diverted billions of dollars from the economy as industry is unable to function at full capacity and the government is forced to spend heavily on troops and weapons.
Norway and Cuba are serving as guarantors for the talks, with Chile and Venezuela as observers.
The discussions are set to resume in Havana on June 11, a government spokesman said.