Companies in the south were given a green light by the Dublin government to seek to employ a ready pool of available undergraduates in Northern Ireland - without the risk of losing their present tax-exempt status.

The announcement came after the Taoiseach-elect, Brian Cowen, met the Executive's Finance Minister, Peter Robinson, who was due to be confirmed today as the new DUP leader, paving the way to becoming the next First Minister.

The two future leaders of Ireland, north and south, were then taking part in the formal announcement of the landmark financial services deal.

Mr Cowen told the event at the Northern Ireland Science Park in Belfast that his government will look favourably on companies who want to shift north or launch satellite operations in the province.

He said that he believed Northern Ireland can play a key role in providing additional financial service skills to companies based at the International Financial Services Centre in Dublin.

Companies in the Republic have identified significant skills shortages, especially in the financial services industry, including hedge funds, management and particularly in Dublin.

Among the positions they need to fill urgently are legal services, accountancy and economists with salaries expected to be in the range of £20,000-£35,000.

Mr Robinson has long said Northern Ireland needs not just more and new jobs but better paid jobs, to prevent the province falling further behind the UK wages average.

A number of companies are understood to have already made representations to Invest NI for what would amount to allowing a competitive advantage in international financial services.

It is the result of detailed contacts between Mr Robinson and his officials and the Department of Finance in the Republic since last June and July, but it is not part of the Varney process focused on corporation tax.

Officials of the Department of Finance and Personnel at Stormont today confirmed that the move is not a way of negating corporation tax.

Mr Robinson said the announcement was a win-win result for the economies of Northern Ireland and the Republic and a real example of meaningful cross-border co-operation.

"In today's economic climate it is important that we seek to exploit whatever economic opportunities arise for us and can benefit the people who live here," he said.

"I have been working on this issue with Brian Cowen for a number of months and am delighted that we have been able to reach an agreement that will be to the benefit of us all.

"This is a win-win result for our two economies (Northern Ireland has) a well deserved reputation as a centre of excellence.

"We have a well educated workforce and we are seen across the world as 'can-do' people who have the will to work and to do the job well."

His comments came amid speculation that he will be replaced as Finance Minister by the present Enterprise Minister Nigel Dodds who was also today expected to be confirmed as the new DUP deputy leader. The party's assembly group was meeting this morning to decide its leadership.

Mr Robinson said he made no apologies for the extent to which the executive budget focused on economic growth because the executive's greatest challenge was to create a peaceful, stable society with a vibrant economy.

"For years people have been talking glibly about cross-border co-operation that is to the mutual benefit of people in Northern Ireland and the Republic.

"This is what it looks like," he said.

"For the Republic it allows for the expansion of an already significant financial services sector and for Northern Ireland it provides the potential of

thousands of high value-added jobs."

Today's announcement came following the revelation of the establishment of the Emerald Fund in New York last Friday.