In a videotaped statement, three masked ETA members said they were laying down their weapons to promote democracy in the northern Spanish region. The news prompted jubilation across the country, where ordinary citizens say they can hardly believe the end has come for a group blamed for more than 850 deaths and some 12 billion in damage since the 1960s.
The worst single attack claimed by ETA was a 1987 bombing that killed 21 people in an underground car park at a Barcelona supermarket. The movement later apologised for the "mistake".
But it preyed on its own people as well in its struggle to establish an independent Basque homeland in northern Spain and south-west France - ETA members were heavily involved in blackmailing thousands of Basque businesses in order to increase their funding.
Spain's prime minister, Jose Luis Rodriguez Zapatero - who has made granting more rule to the regions a key goal of his government - expressed caution and hope at ETA's statement. He was evasive when asked if he would now start negotiating with ETA under an offer he made last year, contingent on the group renouncing violence.
"Any peace process after so many years of horror and terror will be long and difficult," he told parliament.
Mr Zapatero said that until now, Spain's political parties had been joined in pain over ETA violence. "Now I trust we will be joined in hope."
The ceasefire was seen as a huge victory for Mr Zapatero, but his critics maintained a hard line, saying they would fight to make sure the government did not give too much away.
"One cannot pay a political price for peace. If we were to do so, terrorism would have won," said Mariano Rajoy, leader of the conservative opposition Popular Party.
The ETA video showed three people seated at a table in front of an ETA flag, with their faces covered by beige masks and all wearing Basque berets. The figure in the middle, a woman, read out the statement.
ETA "has decided to declare a permanent ceasefire as of 24 March, 2006", the statement said.
"The aim is to promote a democratic process in the Basque country and to build a new framework in which our rights as a people will be recognised," the group said. The statement was sent to several Basque media outlets, including the radical newspaper Gara.
The newspaper said yesterday that it was also in possession of another, complementary ETA statement, but would not publish it or comment on it until today.
A statement from the office of the French president, Jacques Chirac, welcomed the news. "He believes [the announcement] raises great hopes for Spain and for the fight against terrorism," it said.
The ETA announcement set off quiet celebrations around Spain.
"It's the news we have been waiting many years for. It's the best news I have received lately," said Jose Felix Urbano, 52, an administrative worker in Vitoria, the capital of the Basque region. "I hope that from here on I can live in a normal country."
Barbara Durkhop, the widow of ETA victim Enrique Casas, killed in 1984, said she was hopeful but nervous.
"The first thing I thought was that now there will be no more deaths," she told the Spanish television station Quatro. "This could pave the way, once and for all, to the peace process that we have waited so long for."
In Madrid, there was shock, and a bit of caution.
"It's amazing. I hope to God it's true," said Sandra Dorada, a 29-year-old postal worker. "But they have said this before and it wasn't true."
Speculation about an end to ETA's armed campaign has been building for months, despite a recent wave of small-scale bombings.
The prime minister has offered to hold talks with Basque separatist leaders once ETA agreed to lay down its arms, and Spain's parliament has backed the move in a resolution passed in May.
Asked yesterday if ETA's announcement meant the government could now open talks with ETA, Mr Zapatero said: "I will take my time to study the parliamentary resolution. It is essential for proceeding safely."
ETA has announced a number of cease-fires in the past, but never one it called permanent.
Many Spaniards believed that after the terror attacks in Madrid on 11 March, 2004, carried out by Islamic extremists, violent activities by ETA had effectively been finished - a similar position to that which the IRA found itself in following 9/11. The widespread theory was that popular revulsion over terrorism made more deadly violence politically unthinkable.
ETA, established in the late 1960s to fight for an independent homeland for the Basque people,
has mostly targeted members of the security forces although in the 1990s it increasingly began to kill politicians. In 1995, in one of its most audacious plots, it tried to assassinate Jose Maria Aznar, then an opposition leader who would go on to become prime minister. Nobody was seriously injured.
ETA stands for the Basque phrase Euskadi Ta Azkatasuna, meaning Basque Homeland and Freedom.
Supporters remain militant as ETA announces ceasefire
IN THE aftermath of the historic announcement by ETA of a permanent ceasefire, due to come into effect tomorrow, the mood among ETA supporters remains militant.
This defiance is visible in the 2,500-strong town of Etxarri-Aranatz, an ETA haven in the mountainous Navarre province bordering the Basque country. "We will appear like idiots if ETA ever gave up the struggle without achieving our objectives. Why then would we have suffered so much?" said the mayor, Juan Bautista, a 32-year-old manual worker whose brother was jailed after murdering a prominent Socialist politician. He is one of five local ETA members still in prison.
The town's former mayor was assassinated by ETA in 1979 - one of his killers was later named an honorary citizen. "We honoured him because he was a true Basque fighter," added Mr Bautista.
But Salvador Ulayar, 41, son of the murdered mayor, said: "Those opposed to ETA are terrified. My father was actually a Basque nationalist who made us speak Basque at home, but he was against violence, so they killed him as a signal to others."
He does not believe anything has changed after yesterday's ETA announcement: "ETA supporters see peace negotiations as a process in which they'll impose their views."
In one of the local bars, covered with ETA posters and black-and-white photographs of dead terrorists, one young customer said: "We'll never give up our struggle in return for becoming another province in a federal Spain. Otherwise the war will continue."
ALFONSO DANIELS IN ETXARRI-ARANATZ