UPDATE 3-Motor racing-Deal reached to avoid breakaway F1 series

* 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 (Reuters) - 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.

MOSLEY LEAVING

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.