President Domitien Ndayizeye and Agathon Rwasa, leader of the Hutu Forces for National Liberation (FNL), signed the cessation of hostilities pact after their first face-to-face talks in the Tanzanian commercial capital of Dar es Salaam.
"We are determined to seek peace," said Rwasa.
"If during the process any problem occurs, we will discuss it thoroughly and if consensus fails, we will ask for mediation."
"Since we have accepted a cessation of hostilities, we shall do our best to keep the peace in Burundi."
Years of fighting
Burundi, a nation of seven million, is slowly emerging from 12 years of war pitting majority Hutus against the politically dominant Tutsi minority. About 300,000 people have been killed.
Many child soldiers are being
treated in demobilisation camps
A recent resumption of contacts between the government and the FNL has produced the best hope in years among diplomats that Burundi can finally lift one of its last big barriers to peace.
The government broke off all contact with the FNL after the rebels said they were responsible for the massacre of more than 150 Congolese Tutsi refugees at a refugee camp in west Burundi.
Since the massacre, regional countries that shepherded Burundi's peace process have dubbed the FNL a terrorist organisation, a label they have said they will lift formally when the FNL shows itself to be committed to peace talks.
"Since we have accepted a cessation of hostilities we shall do our best to keep the peace in Burundi"
Forces for National Liberation (FNL) rebel group
Burundian Foreign Minister Therence Sinunguruza said the two parties would set up technical teams in less than one month to decide how to bring about a permanent ceasefire, and would start talks "very soon" on bringing the FNL into the peace process.
Ndayizeye, who shook hands with Rwasa after signing the pact in front of journalists, said: "The first priority is a cessation of hostilities, then we shall pursue a ceasefire."
Burundi held its first democratic poll in 12 years on 28 Febuary, a referendum that saw a new constitution approved.
Breaking the truce?
The FNL honoured an accord not to disrupt the February polls but has since been blamed for small attacks and army troops have hunted the rebels in their strongholds near the capital.
Polls to be held by 19 August are meant to create a government that guarantees Hutu majority rule and Tutsi representation.
Peace hopes rose in January 2004 when Ndayizeye met FNL officials - excluding Rwasa - in Amsterdam and agreed on the need to stop violence and help create a climate for peace.
But fighting resumed within days. The conflict has been marked by atrocities by all sides.
More than 150 Tutsis were killed
in a refugee camp in 2004
The FNL is the more openly ethnic of the main Hutu groups, arguing that since both Hutus and Tutsi committed atrocities against each other, they should sit down together for talks and recognise each other's responsibility in the massacres.
The FNL, which has about 3000 fighters mainly in Bujumbura Rurale district around the capital Bujumbura, says it wants a kind of contract of forgiveness between the two ethnic groups.
The larger Hutu Forces for the Defence of Democracy group, which agreed to join the transitional government in 2003, emphasises the need for democracy rather than ethnic rights.