* Breakaway F1 series averted after deal reached
* Teams win battle with Mosley who will not seek re-election
* 2009 rules will remain in place for immediate future (Adds details on Mosley's immediate future, statements)
By Estelle Shirbon
PARIS, June 24 Peace broke out in Formula One on Wednesday when a deal was reached to avert a breakaway series and teams agreed to further cut costs without a budget cap.
Embattled FIA president Max Mosley, who said he would not be seeking re-election, had been at loggerheads with eight teams over his plans to introduce a cap for 2010.
"The basic news is that there will be no split. There will be one championship in 2010 which is I think something we all hoped," Mosley told a news conference following a meeting of the FIA's World Motor Sport Council.
"We've reached agreement on a number of items. In particular we've reached agreement on reduction of costs. We've had significant help from the teams. The objective is to get back to early 1990s levels within two years."
The Formula One Teams' Association (FOTA), headed by Ferrari president Luca di Montezemolo, had objected to the budget cap which they felt could lead to a two-tier series with the teams agreeing to the cap being allowed greater technical freedom.
The governing FIA further fuelled the furore this month by publishing a 2010 entry list including all the existing 10 teams and three new entrants despite the wrangling.
FOTA responded by announcing plans for a breakaway series before last weekend's British Grand Prix but the teams have now committed themselves to F1 until 2012 and the FIA generally.
The FIA published a statement outlining the agreement (here) and reiterated that the 10 current teams plus Manor, U.S. F1 and Campos had been accepted for next year.
However, the three new teams had agreed to join when a budget cap was still planned.
Mosley, who earlier this week hinted he wanted to stay on in his post and would not be forced out, will now step down when his mandate ends in October.
"I will now be able to look at Formula One knowing it's peaceful and stable and be able to stop as was always my intention in October of this year so I won't present myself for re-election now that we've got peace," Mosley said.
He will in effect step away from Formula One immediately and will only govern other motor sports in the coming months, with the FIA Senate looking after F1.
The Briton survived calls for his resignation last year after a sado-masochistic sex scandal but won a confidence vote.
F1 commercial supremo Bernie Ecclestone was thrilled.
"I'm obviously very, very happy that common sense has prevailed which I've always believed it would because the alternative was not good at all," he told the news conference.
"I'm also I must say very, very, very happy the teams have come to their senses to stop spending large amounts of money."
Montezemolo, who will chair a FOTA meeting in Bologna on Thursday, was pleased this year's rules will continue.
"I think the decisions we have shared this morning are important. We will have the rules of 2009, same rules for everybody. It means that we have stability," he said.
Both sides gave the impression of compromise but a Ferrari statement (www.ferrari.it) gave no doubt who it thought had won the battle.
"The FIA's World Motor Sports Council has today approved all FOTA's proposals," it said. "The objective is to avoid continuous changes decided by one person alone."
(Additional reporting by Alan Baldwin and Paris bureau)
(Writing by Mark Meadows; Editing by Ed Osmond; To query or comment on this story email firstname.lastname@example.org)