The row which threatened to split Formula 1 racing in two has been resolved – bringing peace to the sport and a clear future for the three Oxfordshire teams competing next season.

Max Mosley, president of the sport’s governing body, the FIA, has agreed to stand down in October and an agreement was reached between the association and the rebel Formula 1 Teams' Association (FOTA).

The news follows a breakthrough meeting of the World Motor Sport Council in Paris, and a cost-cutting deal being struck between the FIA and the eight members of FOTA — Ferrari, McLaren, BMW Sauber, Enstone-based Renault, Toyota, Red Bull, Toro Rosso and Brawn GP, which has its headquarters in Brackley.

Last week it was predicted that hundreds of jobs could be lost in the county if the FIA succeeded in imposing a £40m spending cap on the teams.

The resulting split left Grove-based Williams and newcomer Manor F1, which will have its cars devised and manuafctured by Wirth Research in Bicester, in the FIA camp with the rest going with FOTA.

Confirming the compromise, Mosley said: "There will be no split. We have agreed to a reduction of costs.

"There will be one F1 championship, but the objective is to get back to the spending levels of the early 1990s within two years."

The move was welcomed by Williams which originally said that it was obliged to stay with the FIA because of commitments to its sponsors.

Chief executive Adam Parr said: “It is fantastic news as it allows us to have a championship with 13 teams along with a commitment to continue with cost reductions. It is the perfect outcome.”

Wirth Engineering spokesman Simon Crompton added: “We are just carrying on, keeping our heads down and looking forward to next season. It is a very exciting time.”