The international community hailed the power-sharing deal in Yemen between the government and the Southern Transitional Council as an "important step", despite it being rejected by the Houthi rebels.
The agreement was jointly signed on Tuesday by Yemeni President Abdrabu Mansur Hadi and Gen Aidrous Al Zoubaidi, leader of the STC.
Announcing the deal on Tuesday evening, Saudi Arabia's Crown Prince Mohammed bin Salman said it was a step towards a political solution to end the protracted war that has raged since 2015.
The deal includes 50 per cent STC representation in the government, which is to be formed a few days after the signing ceremony.
It also establishes the STC as an official partner of the Arab Coalition and gives it an effective role within the tripartite monitoring committee that will be in charge of overseeing the agreement.
But the country's Houthi rebels said the deal "does not matter".
"The Riyadh agreement does not matter to the Yemenis since it was signed by the parties co-operating with the aggressor. The signing of this deal was imposed on those who have no will and consideration towards stopping the war in Yemen," Mohammed Ali Al Houthi, a member of the Houthi council, said on Twitter.
The remarks made by the rebels were dismissed by the Coalition.
United Nations special envoy to Yemen Martin Griffiths said the agreement was "an important step for our collective efforts to advance a peaceful settlement to the conflict in Yemen".
"I hope that this agreement will strengthen stability in Aden and the surrounding governorates and improve the lives of the citizens."
The United Kingdom also expressed full support for the agreement.
"Recognising the difficult political, humanitarian and security situation in the south of Yemen, we applaud the efforts of Saudi Arabia in seeking to re-establish security and stability in the region," a spokesman for the British foreign ministry said.
US President Donald Trump also hailed the agreement as “a very good start”, and said: “[P]lease all work hard to get a final deal”.
Prince Khalid bin Salman, Saudi Arabia's Deputy Defence Minister, said "we hope this agreement will represent a new chapter for Yemen, in which sincere dialogue will prevail and a comprehensive political solution will be reached that serves Yemen and Yemeni people".
Riyadh's Minister of State for Foreign Affairs, Adel Jubier, said on Twitter the agreement "sends an important message to the world that a political solution is possible in Yemen, and that the Kingdom's role in reaching a resolution is crucial".
"The Kingdom will continue to stand with our Yemeni brothers, as it always has."
Kuwait's Emir Sabah Al Ahmad also hailed the deal and said it would ensure Yemen's stability.
"The agreement will contribute to unifying ranks to solve differences and preserve brotherly Yemen's security and stability," the Kuwaiti emir said.
UAE Minister of State for Foreign Affairs Dr Anwar Gargash described the signing as a "historic day".
Celebrations in Yemen
Hundred of people took to the streets of southern Yemen to celebrate the power-sharing deal.
"The event deserves to be celebrated. We came from different areas in Hadramawt to take part in this celebration in the centre of Al Mukalla city," Mohamed Bahadad told The National.
He said people were "optimistic because the agreement was brokered by Saudi Arabia and the UAE, whom we extremely trust".
In the southern provinces of Aden, Abyan and Shabwah, people celebrated at home with fireworks and traditional dances.
"It is time to leave our pains, we having experienced bitter times, it is time to think about development and reconstruction," said Majed Mahdi from Abyan.
Citizens in Aden were out in cafes and markets celebrating, saying they believe the deal represents a new chapter for the country's stability and security.
"The agreement is a huge political victory for the Southern Cause. We have been struggling for years to let the region and the world listen to our voice in South Yemen," Saleh Al Shourafi said while sitting in a cafe in Al Tawahi district.