The Brazilian government has joined forces with the World Bank to protect 25 million hectares (62 million acres) of Amazon forest by the year 2000.
The deal, brokered by the international conservation organisation W-W-F (World Wildlife Fund) was announced on Wednesday.
The move is the largest single contribution towards conservation in the Amazon and the World Wildlife Fund is pushing for other countries to follow Brazil's lead.
The alliance between the World Bank and the World Wildlife Fund is aimed at protecting forests worldwide.
Wednesday's ceremony saw the signing of two decrees for protected areas in the Amazon and two more in the Atlantic Forest - a total of 600,000 hectares (1.5 million acres).
Under the agreement 25 million hectares (62 million acres) will have protected status by the year 2000.
"This is a testimony of our commitment to preserve the environment for the benefit of our people including the indigenous population and our future generations."
SUPER CAPTION: Fernando Henrique Cardoso, President of Brazil
Brazil's eight and a half million square kilometres of Amazon rainforest is home to one-tenth of the world's plant and animal species.
Currently only three percent of the Brazilian Amazon is protected - the new agreement will bring that up to ten percent - an area the size of the United Kingdom.
The World Bank have stated their commitment to see this kind of deal repeated across the world.
"It's necessary for us environmentally in every sense. And if we don't do something about it and we don't draw the line then our kids are not going to have forest and the environment is going to be much worse than it is today."
SUPER CAPTION: James Wolfensohn, President, World Bank
Brazil loses more forest a year than any other country in the world.
More than two million hectares of Brazilian forest are lost each year to illegal logging, clearance for agriculture, mining and forest fires.
Two of the new areas to receive protection as of Wednesday will be in the state of Roraima which was so badly burnt in the recent forest fires.
The blaze lasted for three months before the rains came.
In the children's hospital near Boa Vista, the capital of Roraima, the wards are still full of children whose long-term health has been damaged by breathing in acrid smoke from the fires.
Protection of remote forest areas is a major challenge and the success of Wednesday's agreement hinges on an effective patrolling system.
Teams of wardens will be designated to carry out aerial and land based patrols to prevent loggers and farmers from penetrating the new reserves.
The World Wildlife Fund is urging industrialised countries to make financial contributions to help run these costly operations.
"In three weeks from now the G-8 will meet in the U-K. We are challenging these rich governments in the G-8 to do their utmost to participate in this alliance and also to contribute funds to forest conservation because without money it will not be possible to achieve what we are trying to achieve."
SUPER CAPTION: Claude Martin, Director General, World Wildlife Fund
Wednesday's commitment by Brazilian President Fernando Cardoso should make richer countries consider their commitment to the remainder of the world's forests.