Indonesia has announced a two-year moratorium on rainforest logging in return for up to $1bn in aid from Norway, which will help preserve forests.
Susilo Bambang Yudhoyono, Indonesia's president, made the announcement on a visit to Oslo, the Norwegian capital, on Wednesday.
"We will ... conduct a moratorium for two years where we stop the conversion of peat land and of forest," Yudhoyono said at a joint press conference with Jens Stoltenberg, the Norwegian prime minister, a day before an international deforestation conference started in Oslo.
The Norwegian aid to Indonesia will come from a fund that Oslo set up to fight deforestation around the world.
Together with Brazil, Indonesia boasts one of the world's largest rain forests, which function as global "lungs" that convert carbon dioxide into oxygen.
The country, however, also accounts for a large portion of the world's deforestation, especially on the islands of Sumatra and Borneo.
According to Greenpeace, forests covering the equivalent of 300 football fields disappear every hour in Indonesia.
A Norwegian negotiator said the moratorium would take effect "immediately".
"There is of course a lot of illegal logging," said Hans Brattskar, who heads the International Climate and Forest Initiative, launched by the Norwegian government.
"But the conversion of the forests and the peat land into plantations and for industrial use, especially for paper and palm oil production, represents a very large part of deforestation in Indonesia," he told the AFP news agency.
"It is therefore important to emphasise the Indonesian authorities' courage in depriving themselves of potential future revenue sources," he said.
Norway will begin support for Indonesia's efforts by enabling the country to set up a control mechanism to help fight deforestation, and as of 2014 the Scandinavian country will offer aid, contingent on Jakarta's progress.
"If there is no reduced deforestation, we will not pay. If there is reduced deforestation, we will pay," Stoltenberg told the press conference on Wednesday.
According to the UN Intergovernmental Panel on Climate Change, or IPCC, deforestation is responsible for 17 per cent of global greenhouse gas emissions, which is more than all the world's modes of transport combined.