British Prime Minister David Cameron and Scottish First Minister Alex Salmond have signed an agreement to hold a
referendum in 2014 on Scottish independence, the prime minister's office has said.
The deal will allow Scotland to decide in a 2014 referendum whether it should become an independent country or stay within the United Kingdom after three centuries of union with England.
Scotland's drive for sovereignty, led by its nationalist leader Alex Salmond, echoes separatist moves by other European
regions such as Catalonia in Spain and Flanders in Belgium at a time when a crisis-hit European Union undergoes deep changes to its identity.
Salmond said the agreement would mean a referendum "made in Scotland", while Cameron said keeping the United Kingdom together was his number one priority.
Nationalists have timed the vote to coincide with the 700th anniversary of the Battle of Bannockburn when Scottish forces
led by Robert the Bruce defeated English invaders.
Cameron opposes Scotland's push, arguing that Britain is stronger together, but London agrees it is up to Scottish to decide their future for themselves in a vote.
"There are many things I want this (government) to achieve but what could matter more than saving our United Kingdom?"
Cameron said in a speech last week. "Let's say it : We're better together and we'll rise together."
Scotland's First Minister Alex Salmond speaks to Al Jazeera on Scottish referendum.
Al Jazeera's correspondent Laurence Lee, reporting from Edinburgh, said that the referendum would ask Scottish people to decide if they wanted to be part of the United Kingdom.
"The Natonalists will say that it is no longer in the benefit of Scotland to be part of the United Kingdom and to be ruled by Westminister on things very specifically related to tax raising powers and foreign and defence policies.
"They already have a government and a parliament here; they have some degree already of some autonomy but they want to go the whole hog, the whole way now. This is the question they are going to be asked in two years time," our correspondent said.
Following months of negotiations, both sides have made major concessions to pave the way for the final accord signed on Monday by Cameron and Salmond at Edinburgh's St Andrew's House - the seat of the Scottish government.
"The agreement will see Scotland take an important step toward independence, and the means to create a fairer and more prosperous Scotland," Salmond said ahead of the meeting. "I look forward to working positively for a yes vote in 2014."
Scotland already has many of the trappings of an independent nation such as its own flag, legal system, sports teams, as well as a distinctive national identity following centuries of rivalry with its southern neighbour.
London argues an independent Scotland - home to about five million people - would struggle to make ends meet as the bulk of is current funding comes from a $48bn grant from the UK government.
But one of the most contentious issues at stake is the ownership of an estimated 20 billion barrels of recoverable oil
and gas reserves beneath the UK part of the North Sea.
Britain is also worried about the future of its nuclear submarine fleet based in Scotland which says there would be no
place for atomic arms on its soil following independence.
Moving the fleet elsewhere would be costly and time-consuming. Many Scots themselves are unconvinced.
Opinion polls show only between 30 and 40 per cent of them support independence - a range that has changed little as negotiations intensified.
Scotland and England have shared a monarch since 1603 and have been ruled by one single parliament in London since 1707.
In 1999, for the first time since then, a devolved Scottish parliament was opened following a referendum by the then Labour government of Tony Blair.