"I warmly welcome this important step in relations between Latvia and the Russian Federation," NATO Secretary General Jaap deHoop Scheffer said in a statement.

He said he looks forward to an early ratification of the agreement by the Latvian Saeima (parliament) and the Russian Duma.

Latvian Prime Minister Aigars Kalvitis and his Russian counterpart Mikhail Fradkov signed a deal on Tuesday, clearing up one of the European Union's (EU) last lingering border disputes.

The border issue has remained controversial since the 1991 collapse of the Soviet Union. Although clearly marked on the ground, the border was not subject to a treaty despite the fact that it has formed the eastern frontier of the EU and NATO since 2004.