Sinn Fein has agreed to back a deal to restore powersharing at Stormont – a move that confirms the return of devolved government in Northern Ireland after a three-year absence.

With the DUP having already signalled its support for a draft deal proposed by the UK and Irish governments, the republican party’s endorsement means the two parties will re-enter a mandatory coalition in Belfast.

Peace process structures mean a ministerial executive can only function with the inclusion of the largest unionist party and largest nationalist party in the region.

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Making the announcement on Friday evening, Sinn Fein President Mary Lou McDonald said: “We now have the basis to restore power sharing, and we’re up for that.

“There’s no doubt there are serious challenges ahead; the impact of Brexit, austerity and other pressing issues.

“But the biggest and most significant challenge will be ensuring we have genuine power sharing build on equality, respect and integrity.”

She added Sinn Fein was “committed” to Irish reunification efforts and to make sure all people across the north and south divide enjoy the same rights.

The wide-ranging deal, which was published by the governments on Thursday night, contains compromise solutions to the vexed disputes at the heart of the 36-month powersharing impasse, such as legislative provisions for Irish language speakers.

It also includes what the UK government has insisted will be a major Treasury-funded financial package to tackle a host of acute problems facing a public sector that has been floundering amid the governance vacuum.

That includes a high-profile industrial dispute in the health service which on Friday saw nurses again walk out on strike.

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Under the terms of the deal, the new executive will also take action to reduce spiralling hospital waiting lists; extend mitigation payments for benefit claimants hit by welfare reforms; increase the number of police officers on the beat; and resolve an industrial dispute involving teachers.

The last DUP/Sinn Fein-led coalition government collapsed in January 2017 over a row about a botched green energy scheme.

That row subsequently widened to take in more traditional wrangles on matters such as the Irish language and the thorny legacy of the Troubles.