(adds minister, Italian observer, details)
By Skye Wheeler
JUBA, Sudan, Feb 23 (Reuters) - With whoops and backslaps, Uganda's government and Lord's Resistance Army (LRA) rebels signed a ceasefire on Saturday, a big step towards a final peace settlement to one of Africa's longest-running wars.
"It is the laying down of arms. It is the end of the war," U.N. envoy Joaquim Chissano said after the parties signed the "permanent ceasefire" agreement during their fast-progressing talks in southern Sudan's capital Juba.
With only a demobilisation deal left to be agreed on, negotiators and mediators like Chissano are predicting a final accord will be reached next week to end one of the world's most macabre and least-understood conflicts.
After a tortuous process since talks began in mid-2006, the speed of progress in recent days has taken observers by surprise, particularly after the LRA delegation walked out at one point this week in a row over cabinet jobs and cash.
The LRA revolt against President Yoweri Museveni since 1986 has devastated north Uganda, killed tens of thousands of people, uprooted nearly 2 million, and become infamous for the brutal methods of the rebels including mutilating victims.
At Saturday's signing, presided over by chief mediator and South Sudan's Vice President Riek Machar, rebel and government delegates embraced each other warmly. Both teams thumped tables in joy, as cries and whistles filled the hall.
Saturday's deal prohibits any recruitment or rearmament by the LRA, or movement beyond a temporary assembly area in south Sudan where they will remain prior to demobilisation.
The ceasefire, formalising a cessation of hostilities agreed in mid-2006, creates a 10 km- (6 mile-) deep buffer-zone around the LRA assembly area, guarded by southern Sudanese troops.
All that remains on the talks' agenda is an agreement on how the rebels should demobilise and disarm, which negotiators call a technicality that will be dealt with quickly.
Chissano, the former president of Mozambique, warned both sides not to fall at the final hurdle. "Let us not be obfuscated by this joy. We must see clearly a way to complete peace."
The news from Juba will be music to the ears of the long-suffering Acholi population of north Uganda, who have borne the brunt of the conflict. They have suffered not only from rebel attacks and forced recruitment of children, but also from rape and other abuses by Uganda's military at refugee camps.
Violence has largely subsided during the peace talks, and some refugees have begun returning. But the trickle back to their old villages and homes could turn into a mass return once the final peace deal is signed, aid agencies say.
The fate of the LRA's self-styled mystic leader Joseph Kony remains uncertain. He is wanted by the International Criminal Court in The Hague, but earlier in the week both sides agreed serious crimes during the war would be dealt with locally.
Analysts believe that satisfied Kony he would not be prosecuted abroad, and enabled the progress of recent days.
On Friday, the sides signed another agreement in which the government committed itself to give the north better representation in public offices and the armed forces.
Although most of its atrocities were against Acholis, the LRA cast its rebellion as a fight for the rights of northerners whom it said had been marginalised and oppressed by Museveni.
Italian peace worker and long-time observer at the LRA talks, Vittorio Scelzo, said the demobilisation and disarmament had been well prepared and would be signed quickly.
"We are talking one, two or three days," he told Reuters.
Uganda's Interior Minister Ruhakana Rugunda said the permanent ceasefire was a "milestone" and the peace talks had reached a point of no return.
Kampala would ask the ICC to rescind its indictments of Kony and two of his commanders when the deal went through and "all documents and the necessary mechanisms are in place," he said. (Writing by Andrew Cawthorne, editing by Mary Gabriel)