The UK will return to the European Union (EU)’s £85 billion Horizon research programme in a breakthrough welcomed by scientists frozen out of the scheme in a post-Brexit row.

Researchers based in the UK can from Thursday apply for grants to take part in the collaboration programme after Rishi Sunak secured what he called “the right deal for British taxpayers”.

According to the EU’s estimate, Britain will contribute around £2.2 billion (almost 2.6 billion euros) per year to participate in both Horizon and the Copernicus space programme from January 1, when its association membership with the projects begins.

But it will not take part in the bloc’s nuclear technology scheme Euratom.

With costs a key barrier for negotiators to overcome, the UK will not have to pay into the scheme for the two years it was frozen out in a tit-for-tat retaliation in a dispute over post-Brexit trading arrangements for Northern Ireland in 2020.

The Government said the deal includes a “clawback” mechanism, which will see the UK compensated if British scientists receive significantly less money than the UK puts into the programme.

The Prime Minister said talks ended in a “specific deal for the UK that works in the best interest of our researchers and scientists but also in the best interest of British taxpayers”.

Labour called the deal a “relief” but said it comes “too late” for many researchers.

Party leader Sir Keir Starmer said: “I think there is a sense that we have lost two years, that this should have happened two years ago and that is a big loss.”

He said the decision not to join Euratom is a “gap” Labour will look at.

However, Mr Sunak told science reporters during a visit to Warwick University that the fusion industry said “loud and clear” it did not want to associate with the programme.

“So part of our research community said that there are bits of this that we would rather not be a part of because we think we’re better off having a bespoke UK scheme,” he said.

During negotiations, Downing Street insisted that a UK-based alternative to Horizon known as Pioneer remained on the table because Mr Sunak was concerned about “value for money”.

But the Prime Minister’s official spokesman denied that drawing up plans for that project had been a waste of civil servants’ time.

“All of their work, whether they were working on Pioneer or Horizon negotiation, has helped us negotiate a much better position than the one we were in,” he said.

The spokesman said the UK has “secured much better financial terms, protections and transitional arrangements” for Horizon.

He did not rule out Britain making financial contributions to rejoin other EU institutions, such as border agency Frontex.

European Commission president Ursula von der Leyen, who signed off on the deal with Mr Sunak on a call on Wednesday, said: “The EU and UK are key strategic partners and allies and today’s agreement proves that point.”

The agreement was immediately welcomed by scientists after years of warnings that UK researchers have been missing out on collaboration with colleagues in the EU.

Sir Adrian Smith, president of the Royal Society, said it is “fantastic news”.

“Science has so much to offer in terms of tackling global challenges and improving lives. Today the Government and the EU have given that a big boost,” he said.

Sir Paul Nurse, director of the Francis Crick Institute, said he is “thrilled to finally see that partnerships with EU scientists can continue”.

“This is an essential step in rebuilding and strengthening our global scientific standing,” he said.

“Thank you to the huge number of researchers in the UK and across Europe who, over many years, didn’t give up on stressing the importance of international collaboration for science.”

Michelle Mitchell, chief executive of Cancer Research UK, said it will be “overwhelmingly in the best interests of cancer patients and scientists”.

Horizon is a collaboration involving Europe’s leading research institutes and technology companies.

EU member states contribute funds, which are then allocated to individuals or organisations on merit to explore subjects such as climate change, medical advances and artificial intelligence.

Months of negotiations between London and Brussels on Britain’s return followed the signing of the Windsor Framework deal, which was agreed in February and designed to address concerns over post-Brexit arrangements in Northern Ireland.

Science Secretary Michelle Donelan said the Horizon programme is “unrivalled in its scope”, adding that it is a “fantastic day” for British science and technology.