Under the new arrangement, the DfT will be able to develop campaigns, secure production and lead any new pitch activity liaising directly with creative agencies without any COI involvement.
The move comes after intensive talks between the DfT and Alan Bishop, COI's chief executive, took place in order to resolve the dispute in February.
The DfT edged towards a full reconciliation after it returned to COI for media planning and buying, when it agreed to use COI's media agency Carat for its cinema buying.
However, the department, which spends up to £20m a year on ads, retained its creative roster of Euro RSCG London, Leo Burnett, Rainey Kelly Campbell Roalfe/Y&R and Abbott Mead Vickers BBDO.
The DfT argued at the time that its test of the market forced the COI to deliver better prices, but COI insisted prices would have been the same if DfT had remained in the fold.
With a new agreement now in place, the DfT can continue the direct working relationship it has established with creative agencies over the past four years, while COI re-assumes its position as the provider of the central creative framework for the purchasing of creative advertising.
The return should prove a major boost for COI, which has faced a series of inquiries about whether it should retain its main role in government communications.
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