Prime Minister Prime Stephen Harper and Premier David Alward have announced a long-awaited deal to eliminate tolls on the Saint John Harbour Bridge.

Prime Minister Stephen Harper announced a deal on Friday that will remove the tolls from the Saint John Harbour Bridge. (CBC)

Harper said on Friday the federal government would contribute to repairing the aging bridge and forgive the Saint John Harbour Bridge Authority's outstanding federal debt.

The deal is contingent on having the bridge turned over to the province from the federal government and the tolls being removed.

"Removing tolls and helping rehabilitate the Saint John Harbour Bridge is another sign that the economy is our No. 1 priority, and another step forward toward a bright future for the people of Saint John and all New Brunswickers," Harper said in a statement.

'What we are doing here today is far better for the people of Saint John than what we have now ... and it is far better for the government and the people of Canada than the financial arrangement that we have today'— Prime Minister Stephen Harper

Alward said the provincial government will start the legislative and technical work involved in adding the bridge to the New Brunswick highway system. Alward said the process is expected to be finalized by March 31, 2011.

The financial details of the agreement were not immediately released.

Alward said it is important for the economic progress of the province to have highways that move goods efficiently and safely. Removing the tolls is an important part of improving the southern New Brunswick highway system.

"The harbour bridge is an iconic part of the Saint John waterfront and is a key conduit of the people and the goods of the city, for New Brunswick and for the Atlantic region," Alward said at the news conference.

The federal and provincial governments had been haggling over a deal that would erase the 40-year-old bridge's $22-million debt and cover maintenance costs.

Premier David Alward said he is preparing legislative changes that will allow the bridge tolls to be removed by March 31. (CBC)

Saint John Tory MP Rodney Weston also promised in the last federal election that he would work to remove the 50-cent toll.

New Brunswick's former Liberal government had attempted to obtain a bridge deal with the federal government, but then premier Shawn Graham balked at the proposed agreement because he said it was not good enough for the provincial government.

Harper told reporters on Friday that Alward had asked for, and received, some amendments to the earlier deal.

The prime minister said it was important to get a deal rather than getting bogged down in an inter-governmental fight.

"What we are doing here today is far better for the people of Saint John than what we have now. It is far better for the government of New Brunswick than what we have now and it is far better for the government and the people of Canada than the financial arrangement that we have today," Harper said.

"This is in everybody's interest."