The compromise means that FIFA's rules preventing symbols on shirts are still adhered to but will allow the poppies to be displayed.

An FA statement said: "The FA can confirm that FIFA has today agreed that the England team will now be permitted to wear a poppy on the black armbands the players will wear during Saturday's match with Spain.

"While continuing to adhere to the laws of the game, wearing the poppy on the armband does ensure the poppy will be visible throughout the game.

"The FA welcomes FIFA's decision and thanks them for agreeing to this."

The announcement should bring an end to the dispute which led to both Prime Minister David Cameron and Prince William, in his role as president of the FA, writing to FIFA to ask them to reconsider.

William penned a strongly worded note privately to Fifa expressing his dismay at the move.

Cameron also wrote to the organisation, assuring it that there were "no political connotations whatsoever" associated with the poppies.

Less than an hour after the letters were made public, Fifa announced that it would allow England's players to wear a poppy on their black armbands during Saturday's friendly match with Spain.

A spokesman for St James's Palace said William was pleased with the decision.

The spokesman said: "The Duke is happy with this resolution."

A Downing Street spokesman said Mr Cameron welcomed Fifa's decision, saying: "It's a sensible way forward."

A Royal British Legion spokesman said: "The Royal British Legion is delighted that England players will be able to wear their poppy with pride.

"As we said earlier today, there are other ways of honouring the poppy than wearing it on your shirt - the armband will do nicely. Now everyone can concentrate on enjoying the game."

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It is understood that the compromise was proposed by a Conservative MP and facilitated by a FIFA adviser - even though there was opposition from some within the world body after they were targeted two protesters from the English Defence League.

The two men climbed onto the roof of FIFA's headquarters in Zurich with a banner, with two poppies on it, which said: 'English defence League. How dare FIFA disrespect our war dead and wounded. Support out troops'.

The incident won no support from the FA, given that the EDL are a far-right group whose founder Stephen Lennon was convicted in July of leading a street brawl with 100 football fans.

The FA also announce a series of other measures to show their support for the Poppy Appeal.

All England Under-21, Under-19s players and staff will be wear poppies before and after their matches tomorrow evening, and observe a one-minute silence.

On Friday at training at Wembley the England squad will observe the two-minute silence at 11am, all wearing training tops embossed with poppies.

Ahead of the Spain game, a poppy wreath will be placed on the pitch during the national anthems, with military representatives in the presentation party prior to kick-off before which will be a one-minute silence and the England players will wear black armbands.

The Royal British Legion, who organise the Poppy Appeal, said there were other ways other than having the poppies on the England shirts.

The Legion's director general Chris Simpkins said: "There are other ways to honour the poppy than by wearing it on a shirt. The FA has helped us explore every alternative available and we are satisfied that England will enter the competition knowing they have shown proper respect for our Armed Forces."

The Football Association of Wales have also confirmed that they will wear black armbands with the poppy on them for their match with Norway.

The Welsh are also planning to wear warm-up tops bearing the message 'Cymru Yn Cofio', which means 'Wales Remembers', and the poppy emblem.

The players will also have poppies on their jackets during the singing of the national anthem, while there will be a moment's silence before kick off and the match ball will be presented to the referee by a member of the Royal Regiment of Wales.

Scottish Football Association chief executive Stewart Regan later revealed that Scotland hoped to adopt the same approach as England and Wales for their friendly against Cyprus in Larnaca on Friday night.

But the SFA will first consult with their hosts to determine whether the gesture is suitable.

In an official statement released through the SFA, Regan said: "Prior to their departure for Cyprus, the Scottish FA made plans for the Scotland national team players to mark Armistice Day by wearing poppies on their anthem jackets before the match.

"We have kept track of the ongoing debate between the FA and FIFA this week.

"The decision to allow players to wear black armbands featuring poppies during the match is a pragmatic solution to the fact that FIFA's rules forbid the wearing of the poppy on the match shirt.

"Subject to the approval of the Cypriot FA as the host nation we will also adopt this approach in our friendly match on Friday night.

"We believe this is a fitting way to show our respect for those members of the armed forces who have lost their lives fighting for their country."