Under the deal, the RFU will give the Premiership clubs £110 million in exchange for more time with elite players ahead of Test matches. Clubs will also have the right to sell their own TV and sponsorship rights. The deal runs from July 2008 to 2016.
Premier Rugby chief executive Mark McCafferty said the part of the deal which allows the clubs to sell their own TV and media rights - was crucial.
"The agreement provides a good balance between what England needs to build on their success and what the clubs need to continue the rapid growth of the professional club game," he said.
"In addition to the monies being paid by the RFU, it was essential for Premier Rugby and its clubs to secure the full financial potential of their commercial rights in their leading competitions.
The agreement means that England players will be released from club commitments 13 or 14 days before autumn internationals, Six Nations matches or summer tours matches, giving them more preparation time.
The deal should put an end to a dispute that has run intermittently since rugby union turned professional in 1995.
