Colombia and the Marxist-led FARC rebels have reached agreement on the critical issue of agrarian reform, the two sides said on Sunday in 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.

Lead government negotiator Humberto de la Calle reminded that the agreement would take effect only if an overall peace accord is achieved, which has been the guiding principal of the talks since the beginning.

"Nothing is agreed until everything is agreed," he said.

De la Calle said it would represent "a historic change, a rebirth of the Colombian countryside."

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 joint statement, which was read at the end of the ninth round of the talks, which began Nov. 19 in Havana.

The rebels warned that "certain points" in the agrarian reform accord "necessarily will have to be retaken before the completion of the final agreement," but said a path was being opened for "the people to act, to mobilize themselves in defense of their rights."

It was not disclosed how much land would be given out. De la Calle said there would be "an ambitious program of restitution and adjudication of lands" to the rural poor, but that private landowners would not lose their property.

"Legal landowners have nothing to fear," he said.

The agreement drew praise at the United Nations in New York, where a spokesperson for U.N. Secretary-General Ban Ki-moon called it "a significant achievement and important step forward."

Ban "wishes both delegations further success in their efforts to reach agreement on the remaining issues and to put an end to Colombia's long conflict," the spokesperson said.

Adam Isacson, senior associate for security policy at the Washington Office on Latin America think tank, told Reuters the agrarian reform agreement was a "genuine big deal" for Colombia's peace hopes.

"To have arrived at an agreement on land and rural development with a peasant-based guerrilla group for the first time in nearly 50 years is a step whose importance is hard to overestimate," he said.

"It greatly increases the probability - now to well over 50 percent - that a final accord will be reached as a result of these talks," Isacson said.

Many potential obstacles remain, starting with the next agenda item - the delicate subject of political participation for the FARC.

FACING JUSTICE

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 FARC 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 were ready to negotiate an end to the fighting.

Three previous peace attempts - the last ending in 2002 - had failed.

The rebels have been pushed into remote corners of the country but still are 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.

Even if peace with the FARC is achieved, the government still must deal with a smaller rebel force, the ELN or National Liberation Army, and criminal gangs running drug-trafficking operations.

The ELN, with an estimated 3,000 fighters, has expressed interest in seeking a peace accord similar to the one being pursued with the FARC, but Santos has said it must first release captives who include a Canadian citizen.

Norway and Cuba are serving as guarantors for the Colombia-FARC talks, with Chile andVenezuela as observers.

The discussions are set to resume in Havana on June 11, a government spokesman said. (Reporting By Jeff Franks, Nelson Acosta and Rosa Tania Valdes; Editing by Sandra Maler and Bill Trott)