At a meeting in Paris between motorsport's governing body FIA and the Formula One Teams' Association (FOTA) on Wednesday, Mosley said that he will quit in the fall after the completion of his fourth term as FIA president.

"I will not be up for re-election, now we have peace," he said.

Mosley's decision came after eight teams threatened to launch a breakaway championship in a row over controversial proposed new budget restrictions.

Both parties have announced that "peace had been restored" and Formula One's boss Bernie Ecclestone said he was "very happy common sense has prevailed."

"There will be no split. We have agreed to a reduction of costs," Mosley told media. "There will be one F1 championship but the objective is to get back to the spending levels of the early '90s within two years."

Teams free to spend

In an attempt to restrict the power and competitive advantage of Formula 1's top teams, Mosley had wanted to institute a spending cap of 45 million euros ($63.4 million) per season.

The teams were outraged, and last Friday, after two months of fighting, Ferrari, McLaren-Mercedes, Brawn GP, BMW-Sauber, Renault, Toyota, Red Bull and Toro Rosso announced that they would look to start an alternative racing series.

Ferrari also approached a court in France for an injunction against the plan.

Under current rules some of the bigger teams spend up to 250 million euros on their season's budget.

jc/Reuters/AFP/dpa

Editor: Sonia Phalnikar