A ceasefire took hold on Thursday in and around Gaza after a week of cross-border violence between Israel and Palestinian militants that killed at least 160 people.
Foreign Minister Mohammed Kamel Amr of Egypt, which brokered the ceasefire after marathon talks, announced the cessation of hostilities at a joint news conference in Cairo with US Secretary of State Hillary Clinton on Wednesday.
The UN Security Council urged Israel and Hamas to uphold the ceasefire while joining with US President Barack Obama in praising Egypt's President Mohamed Morsi for mediating an end to the violence.
The accord, a copy of which was obtained by AFP, calls on Israel to "stop all hostilities... in the land, sea and air including incursions and targeting of individuals" and urges the Palestinian factions to end "rocket attacks and all attacks along the border".
Israel would be obliged to ease restrictions on Gaza residents under the accord which specified that "procedures of implementation shall be dealt with" 24 hours after the ceasefire went into effect on opening Gaza's border crossings and allowing the free movement of people and goods.
"This is a critical moment for the region," Clinton said. "In the days ahead, the United States will work with partners in the region to consolidate this progress."
After a day of violence that killed another 18 Palestinians, Israeli Prime Minister Benjamin Netanyahu's office said he was prepared to give peace a chance.
"Netanyahu spoke with President Barack Obama and agreed to his recommendation to give a chance to an Egyptian proposal for a ceasefire and thereby give an opportunity for the stabilisation of the situation and a calming of it," said a statement.
Obama commended Netanyahu for agreeing to the ceasefire proposal while "reiterating that Israel maintains the right to defend itself," the White House said.
Gaza City's streets were dark and deserted in the minutes after the truce took effect at 1900 GMT Wednesday, but soon afterwards people poured out of their homes to hail the "victory" as the ceasefire appeared to hold.
Heavy celebratory gunfire could be heard throughout the Gaza Strip and fireworks were released into the sky, where Israeli drones still buzzed overhead.
"The resistance has triumphed," some shouted, alongside chants of "Allahu akbar (God is greatest)."
After urging the two sides to uphold the accord, the 15-member UN Security Council also called in a statement for an international effort to get "emergency aid" into Gaza.
There had to be "expeditious and unimpeded delivery of such humanitarian assistance, including of food, fuel and medical treatment," said the statement.
Meanwhile Obama, re-elected this month, led a chorus of approval for Morsi's mediation work.
"The president thanked President Morsi for his efforts to achieve a sustainable ceasefire and for his personal leadership in negotiating a ceasefire proposal," the White House said.
European Union leaders Jose Manuel Barroso and Herman Van Rompuy also welcomed the ceasefire while stressing that the parties must "ensure its implementation and to prevent the restart of violence".
The exiled chief of Hamas, which rules Gaza, said Israel had "failed in all its goals" and thanked Iran for supporting his Islamist movement during the conflict.
"After eight days, God stayed their hand from the people of Gaza, and they were compelled to submit to the conditions of the resistance," Khaled Meshaal said in Cairo.
The agreement came after a day of shuttle diplomacy led by Clinton and UN Secretary General Ban Ki-moon, who said that details of the deal still needed to be ironed out.
"There are still many details to be solidified for a durable ceasefire. I hope they will finalise these details as soon as possible," he said in Amman, Jordan.
Truce hopes appeared faint just hours before as a blast tore through a bus in Tel Aviv, and Israel hit back with deadly raids on Gaza City and elsewhere in the coastal Palestinian territory.
The blast, which injured 17 people, occurred close to the Israeli defence ministry and was quickly denounced by Netanyahu's spokesman, who tweeted: "This was a terrorist attack".
Soon after, another six Palestinians were killed in air strikes on Gaza City
Israel launched its offensive on 14 November with the targeted killing of a Hamas military chief. It has since hit more than 1500 targets.
Gaza militants fired more than 1500 rockets back at Israel, whose vaunted Iron Dome anti-missile system intercepted more than 420 of them.
Twelve rockets fired from the Gaza Strip hit Israel on Wednesday in the hours that followed the ceasefire agreement, a police spokesman told AFP. The attacks caused no injuries or damage, with the rockets mostly landing in open fields in the south of the Jewish state.
At least 155 Palestinians have been killed in the conflict, and five Israelis have died.
The conflict came as Israel heads towards a general election in January, and raised the spectre of a broader military campaign along the lines of the Jewish state's devastating 22-day operation launched at the end of December 2008.