The Russian and US leaders Dmitry Medvedev and Barack Obama yesterday announced agreements on Afghanistan and cutting their nuclear arsenals as they sought a new era in battered relations.

The ex-Cold War foes issued a declaration on replacing a key disarmament treaty - - including figures for major cuts in nuclear warheads - and clinched a breakthrough deal for US military transit for Afghanistan across Russia.

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But as Obama made his first visit to Moscow as president, they still remained divided over US plans to install a missile defence shield in eastern Europe and Moscow's policy towards the pro-Western exSoviet state Georgia.

'The president and I agreed that the relationship between Russia and the United States (has suffered) from a sense of drift." Obama said at joint news conference in the Kremlin with Medvedev.

"We resolved to reset US-Russian relations. Today after less than six months of collaboration (since coming to office) we have done exactly that." he added.

The declaration signed by the presidents pledges to reach a new nuclear arms reduction pact to replace the 199 1 Strategic Arms Reduction Treaty (START). Obama said it provides for cuts of "up to a third" from current limitations.

It 'commits both parties to a legally binding treaty that will reduce nuclear weapons," the White House saia in a statement.

START is due to expire on December 5 but the declaration gave no target date for a renewal, instructing negotiators to complete the work as quickly as possible.

The declaration called for a reduction in the number of nu ear warheads in Russian ano US strategic arsenals to between 1,500 and 1,675 within seven years and the number of ballistic missile carriers to between 500-1,100.

The cuts go beyond those levels set in the 2002 Strategic Offensive Reductions Treaty (SORT) which calls for botn countries to reduce the number of deployed warheads to between 1,700 and 2,200 on either side by 2012.

"The declared reduction is a real agreement and it suits everyone," said Alexei Malashenko, analyst with the Carnegie Centre in Moscow.

"The Americans have decided to accept Russia as it is. Obama does not have the complexes from the Cold War and does not consider Russia to be an enemy of the United Slates."

The Afghanistan agreement means Russia has authorised the use of its airspace for the transit of US troops and arms, a major boost for Obama's bid to step

up the fight against the Taliban.

The deal permits up to 4,500 military flights per year, or about 12 per day, which can be loaded with troops, firearms, ammunition, military vehicles and spare parts, a senior US official said.

The official said military flights would not be charged air navigation fees and that they would not stop on Russian territory.

Previously Russia had only allowed the United States to ship non-lethal military supplies across its territory by train.

The two sides also signed an agreement to resume bilateral military cooperation suspended last August over Moscow's war in Georgia, an event which sent ties plummeting to a post Cold War low.

But amid the smiles and expressions of goodwill, the US plan to install missile defence facilities in the Czech Republic and Poland — which Russia says threatens its security — remained a major stickingpoint.

' The discussions on missile defence are proceeding with great difficulty because the approaches are very different." Russian Deputy Foreign Minister Sergei Ryabkov said, according to ITAR-TASS news agency.

Obama expressed hope however that "over time we will have seen that the US and Russian positions can be reconciled" and announced that Russia and the United States would step up their joint analysis of missile threats.

Meanwhile he also bluntly repeated the continued US dissatisfaction with Russia's recognition of two breakaway Russian regions as independent, Georgia's sovereignty and territorial integrity "must be respected".

There are areas where we still disagree...we had a frank discussion on Georgia".