Turkey's drive to join the European Union was firmly back on track on Thursday after Brussels and Ankara resolved their damaging dispute over the country's penal code reforms.

Recep Tayyip Erdogan, Turkey's prime minister, told the European Commission he would scrap a contentious clause making adultery a criminal offence when the code reforms are debated in parliament on Sunday.

G?nter Verheugen, EU enlargement commissioner, praised Mr Erdogan's commitment, and said: "No remaining outstanding obstacles remain on the table."

Turkey's financial markets and currency jumped on the news, after a week of mounting concern that the dispute over the penal reforms could derail the country's bid for EU membership in the next decade.

Mr Verheugen said he was now in a position to "make a very clear recommendation" on October 6 on whether Turkey was ready to start formal talks.

A jubilant Mr Erdogan is certain the European Commission will report that Turkey is ready to start talks, and that the EU's 25 leaders would endorse that at a December 17 summit. "December 17 is the date when the green light will be given in order to start negotiations with Turkey," he said.

There was a mood of relief in Brussels that Mr Erdogan, a socially conservative politician, had stepped back from the proposal to make adultery a crime punishable by imprisonment.

The Turkish prime minister had earlier responded angrily to Mr Verheugen's demands that he drop the measure, but on Thursday he accepted it was a price he had to pay. "We have worked hard, and whatever the homework was, we have fulfilled it," he said. "There is no reason not to receive a positive answer."

Among the measures in the new penal code are stiffer sentences for those who torture and who perform "honour killings". The code would also strengthen women's rights, which the EU regards as essential to its October 6 report.

Mr Erdogan's jubilation in Brussels, however, may be tempered by political ramifications at home, some diplomats and analysts said.

The adultery controversy split his cabinet and he may have to work to rebuild relationships, especially with his foreign and justice ministers, who are understood to be dismayed by the way the dispute mushroomed into a crisis requiring such clearing of the air in Brussels.

The controversy also provided ammunition to opponents of Turkish membership, who claim its Islamic culture is incompatible with EU membership.

Jean-Pierre Raffarin, the French prime minister, told the Wall Street Journal yesterday: "Do we want the river of Islam to enter the riverbed of secularism?"

However, Mr Raffarin's boss, President Jacques Chirac, is committed to Turkish membership, as are the leaders of all of the EU's biggest member states.

Austria and Cyprus have serious reservations, but they are thought unlikely to use their veto in Brussels on December 17. Additional reporting by John O'Doherty

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