The United States said that a peaceful settlement to the 30-year separatist conflict in Indonesia's Aceh province was within sight, following a deal reached between the government and rebels.

The Indonesian government and the Free Aceh Movement (GAM) have formulated a draft peace accord for official signing next month, it was announced after negotiations in Finland this week.

"We understand that the two sides have initialed a draft accord. We are hopeful that a peaceful settlement to this longstanding conflict is within reach," State Department spokesman Sean McCormack told reporters.

He said that the United States "supports the territorial integrity" of Indonesia and added that "effective implementation of any written agreement will be key to achieving a lasting peace in Aceh."

Washington, which had previously complained of human rights abuses allegedly committed by Indonesian troops fighting rebels in Aceh, has told Jakarta that it was ready to help bring about permanent peace in the restive province.

Based on the Helsinki deal, the Indonesian government and GAM agreed that "no substantive changes" will be introduced to an eight-page long initialed memorandum before it is signed on August 15.

The agreement aims to bring a "peaceful, comprehensive and sustainable solution" to end a conflict that has raged in the province since 1976 and cost nearly 15,000 lives.

GAM gave up its demand for full independence and said it would disarm, while the government has announced it will withdraw its troops from the province once the rebels hand in their weapons.

A peace deal seemed unthinkable after Jakarta declared martial law and launched a major military offensive in Aceh two years ago.

But renewed efforts to make peace were prompted by a need for international aid to reach Aceh, which bore the brunt of last December's tsunami. More than 131,000 people in the province were killed.