Ferrari in U-turn as they agree peace deal to end F1 civil war

Ferrari will reluctantly submit their entry for next year's world championship, marking the beginning of the end to Formula One's civil war.

The Italians had threatened to quit the sport after six decades' involvement unless the ruling body, the FIA, dropped their plans to introduce a £40million budget cap.

Still in the running: Ferrari's Felipe Massa

Still in the running: Ferrari's Felipe Massa

Ferrari are willing to accept a compromise solution, whereby all teams will operate under a £85m restriction in 2010 with the £40m ceiling coming in for 2011.

Today marks the deadline for entry into the 2010 championship, and all the existing teams - possibly other than Toyota, who are expected to announce their departure at the end of this, their eighth and so far winless, season in Formula One - are likely to sign up.

Not that this quite marks the end of the pyrotechnics. It is thought possible that Ferrari, who the FIA contend are legally bound to stay until 2012, may make their entry conditional on demands concerning the regulations or governance of the sport.

One well-placed F1 insider with strong links to several teams said: 'We are not meant to say anything, but you can expect Ferrari and the others to sign up tomorrow.'

Ferrari - or the Formula One Teams' Association - are considering whether to issue a statement today. It would represent a flexing of their muscles and would effectively dispute who won the war: Max Mosley, the FIA president, or them. For most fans, though, the bottom line is that Ferrari will be on the grid for the opening race inAustralia next March.

It should be noted that Ferrari have managed to shift Mosley massively from his original proposal, namely a £30m cap. That changed to a £40m cap, with engine costs, driver salaries and hospitality and marketing excluded, meaning the actual figure was closer to £100m.

Now it is ostensibly £85m (with no choice to opt out) for a year, but that really equates to £145m when the extras are added. For example, Kimi Raikkonen alone earns £30m a year at Ferrari.

Two prospective new teams, US Grand Prix Engineering and Campos, have already applied for inclusion next season.

Under the compromise deal, proposed by Mercedes, the existing teams have undertaken to help out any new entrants by supplying cheap parts and technical expertise. As for Toyota, they are looking for an elegant exit. Their Formula One project has failed to deliver fruit, despite annual expenditure of around £300m.

With their fellow Japanese manufacturers Honda having withdrawn last December, they can depart without too much embarrassment at home. Grand prix racing can live without them, if not Ferrari.