The Federal Government has agreed major concessions with the mining industry in a redesign of its controversial super profits tax.

The changes, announced by Prime Minister Julia Gillard this morning, include reducing the headline rate of the tax from 40 per cent to 30 per cent.

• Tax renamed the Minerals Resources Rent Tax
• Will only apply to iron ore and coal
• Iron ore and coal will now be subject to a new tax at a rate of 30pc instead of the original 40pc
• Tax will kick in at the government bond rate plus 7 per cent, which would be around 12 per cent
• Oil and coal seam gas to be rolled into the existing Petroleum Resources Rent Tax and taxed at 40pc
• Changes mean the Government loses $1.5 billion of expected revenue

"We've been stuck on this question as a nation for too long," Ms Gillard told a press conference in Canberra this morning.

"Today we're moving forward together... It's also essential we have a stable and a coherent Government and a positive basis for trust, and I believe we have established that this week."

Today's agreement, after intensive discussions with Rio Tinto, Xstrata and BHP Billiton in Canberra this week, ends a two-month brawl with the resources sector which contributed to Kevin Rudd's ousting as prime minister.

Ms Gillard was keen to distance the rebranded tax regime from the old resources super profits tax.

"There will be a Government profit-based tax regime, but there will be no resources super profit tax," she said.

"It will maintain Australia's standing as a competitive and attractive destination for investment."

Treasurer Wayne Swan was quick to heap praise on Ms Gillard for securing the deal.

"I think it's fair to say that her intervention changed the tone of this debate and has led to this breakthrough," he said. "It is a better tax for the consultation, it is a better tax for the negotiation."

The revamped tax will now only apply to a few hundred companies instead of the thousands that would have been liable under its predecessor.

Former BHP chair Don Argus will head a consultation panel with Resources Minister Martin Ferguson to hammer out the final details of the deal.

BHP Billiton and Rio Tinto have issued statements welcoming the new tax proposal, but they say there is still much work to be done on its design before it takes effect.

Minerals Council of Australia chief executive Mitch Hooke called a the deal "a positive outcome for Australia and the Australian minerals industry" but said there was still unfinished business" to be worked through.

The CFMEU mining union has applauded the deal, with national president Tony Maher calling it a "huge win" for the community.