Peace broke out yesterday on one of the Internet's fiercest battlegrounds.

U.S. Commerce Secretary William Daley announced an agreement to resolve the divisive fight over the future of the Internet's "domain name" system--the master list of plain-English names (such as washingtonpost.com) for millions of sites on the World Wide Web.

Under the agreement, the company that currently has the government's approval to maintain the list, Network Solutions Inc. of Herndon, will retain control over the database for the next four years. The deal may allow the company to continue to dominate the market for registering domain names, for which it charges $35 a year.

In return, NSI will give $1.25 million to the Internet Corporation for Assigned Names and Numbers (ICANN), the cash-strapped nonprofit organization set up by the Clinton administration to gradually assume the government's remaining authority over the Internet.

The agreement will also speed the process of breaking NSI's government-granted monopoly over issuing domain names ending in ".com," ".net" and ".org." And NSI agreed to recognize ICANN's authority over many of the administrative functions of the World Wide Web, ending a fight that threatened to destabilize the burgeoning online medium.

Network Solutions stock, which has fluctuated wildly during the year-long dispute, jumped by $12.68 3/4 yesterday on news of the deal, closing at $85.50.

Although the agreement concerns seemingly dull housekeeping functions of Internet administration, online experts called it a crucial event in the development of the global network.

"This is a landmark day for the Internet," Daley said. "Most importantly, we worked this out at the negotiating table, not in a courtroom, where we could have idled the Internet--the engine of growth in today's economy."

Other observers were more cautiously optimistic. "The devil is in both the details and in the way that people perform," said David Farber, an Internet pioneer and professor of computer science at the University of Pennsylvania. "I'm enthusiastic that at least they got this far--no train crash."

The U.S. government had historically controlled the technical aspects of the Internet, which it helped to create 30 years ago in collaboration with academia and the private sector. In 1992, the National Science Foundation entered into a cooperative agreement with Network Solutions to take over the duties of assigning and managing Internet domain addresses. NSI was subsequently acquired by Science Applications International and then spun off as a publicly traded company in 1997.

NSI has registered more than 5 million domain names, its main source of revenue. The company posted $11.2 million in profit last year on revenue of almost $94 million.

With money like that at stake, other companies have long agitated to get into the registration business. The White House announced last year that it would open the process to competition and named ICANN as the organization that would manage the transition.

This April, ICANN granted five firms--including America Online Inc.--the right to register Internet domains as part of a test, and it has selected dozens more since then. But those companies' registration plans have been on hold during the tug of war for Internet authority between NSI and ICANN. ICANN accused NSI of dragging its feet to maintain its monopoly; NSI in turn accused ICANN of trying to become not just the administrator of the Internet but also a governing body for the global network. ICANN threatened to yank NSI's ability to register addresses.

The agreement brings a truce to those various conflicts and defines the continuing role of the federal government as the fallback administrator of the Internet. "If ICANN misbehaves, it is the U.S. government that is in the residual position to stop it," said Michael Froomkin, a professor at the University of Miami school of law and co-founder of a watchdog organization, ICANNWatch. This continuing role for the government, despite its stated intention of getting out of the Internet, is a good thing, Froomkin said, because ICANN "has to be subject to democratic control."

Under the agreement, NSI will pay more than $2 million in fees to ICANN, with the initial $1.25 million coming upfront. The parties settled on a fee to NSI of $6 for the competing companies to place the addresses that they register into the Network Solutions database--far less than the $35 that Network Solutions charges. The wholesale rate will allow the competing companies flexibility in setting prices for registration.

Reaching agreement after many acrimonious months is "a huge relief," said Esther Dyson, ICANN's interim chairwoman. "Everybody here feels they gave a huge amount. This is all about trade-offs and compromise."

The five-part agreements have been posted on ICANN's Web site at www.icann.org/agreements.htm and will be open for public comment for 30 days. The ICANN board plans to vote on the agreement at a meeting in November.