The Welsh Rugby Union has welcomed the announcement that its four professional regions will operate under a salary cap from the start of the 2012-13 season.
Regional Rugby Wales, the umbrella body which represents the regions, revealed the agreement this afternoon and the salary cap of 3.5million pounds will cover the players registered for European competition by the Ospreys, Cardiff Blues, Scarlets and Newport Gwent Dragons, but does not include development players or academy costs.
It is hoped that the cap will lead to a greater sustainability within the professional game in the principality, as well as more emphasis on developing the next generation of Wales-qualified players.
But the deal would also appear to set down a marker that the regions will not engage in bidding wars in an effort to keep hold of their best players.
The cap falls below the 4million pounds allowed in the Premiership, and is dwarfed by the 7.1million pounds maximum available to clubs in the French Top 14, although those caps both include development and academy costs.
James Hook, Mike Phillips and Lee Byrne already ply their trade in France having left the Ospreys last summer, while the likes of Luke Charteris, Adam Jones and Gethin Jenkins are attracting interest from across the Channel.
With the likes of Toulouse, Toulon and Racing Metro reportedly able to offer players salaries of over 500,000 pound a year the regions have had to accept that they do not have the financial muscle to compete, and they had called for the WRU to provide extra funding to help them keep their star names.
But Wednesday's agreement appears to take a stride in the opposite direction, removing the potential for dramatically increasing salary costs during the difficult economic climate.
Wales coach Warren Gatland has long stated his desire for national squad members to be based at home, and has warned those playing outside the principality that their international futures are at stake if they cannot guarantee their release for all Wales squad sessions.
But the WRU have praised the regions for their initiative, and are hopeful it will lead to a greater focus on nurturing talented youngsters within the Welsh system, a system which has already produced stars such as Sam Warburton and George North.
Chief executive Roger Lewis said: "I applaud the regions for the way they have achieved this agreement with one unified voice.
"The WRU invests 6million pound in cash every year to the four regions, in addition to its funding of the four regional academies so is delighted to see the approach to build greater sustainability being taken by the regions.
"I know how hard Stuart Gallacher and the executives, chairmen and funding directors representing each individual region have worked to secure this solution.
"It faces up to the reality of the economic climate we all work in and ensures the regions progress within a workable financial and strategic plan.
"This is the right move at the right time for Welsh rugby and everyone will benefit from this new arrangement.
"A priority for the WRU, together with the four regions, within the elite game is to nurture and develop talented Welsh qualified players capable of challenging for senior Wales caps.
"Our regions do a great job in supporting the investment and development of new Welsh talent with the opportunities and environments they provide to our young players. It is vitally important