NICOSIA, Cyprus (AP) – Greek and Turkish Cypriot leaders have agreed on a process that could pave the way for resuming stalled talks on reunifying the war-divided Mediterranean island, a top U.N. official said Saturday.

Ibrahim Gambari, the UN undersecretary-general for political affairs, said that Cyprus President Tassos Papadopoulos and Turkish Cypriot leader Mehmet Ali Talat had agreed to a set of principles on the future reunification of the tiny island, and hailed the agreement as a “very historic occasion.”

There was an “agreement to begin a process immediately, involving bi-communal discussion of issues that affect the day-to-day life of the people and concurrently those that concern substantive issues, both of which will contribute to a comprehensive settlement,” Gambari said after a three-hour joint meeting with Papadopoulos and Talat at a UN compound near the UN-patrolled buffer zone dividing the two sides.

Gambari said bi-communal technical committees could start work by the end of July, provided that both leaders exchange a list of substantive issues to be discussed by experts from both sides.

An agreement earlier this year to start talks on technical issues had been frozen because of disagreements over what would be discussed.

The Greek Cypriots wanted those talks to include key issues such as demilitarisation so as to prepare the way for more comprehensive negotiations.

However, Turkish Cypriots said they had only agreed to discuss everyday issues such as immigration, crime fighting and the environment.

The peace process stopped in April 2004 after Greek Cypriots rejected a UN reunification blueprint, which Turkish Cypriots backed.

A week later, Cyprus joined the European Union divided, and EU benefits extend only to the southern part of the island.

Cyprus has been divided into a Greek Cypriot south, where the internationally recognised government is based, and a Turkish Cypriot north since 1974, after Turkey invaded following an abortive Athens-backed coup that aimed to unify the island with Greece.

Gambari said the two leaders would meet again from time to time to offer direction to the committees.

Gambari, who concludes his regional tour of Turkey, Greece and Cyprus today, will report back to UN secretary general Kofi Annan, who has said he wants to see a narrowing of the gap between words and actions in Cyprus before launching any new peace initiative.