The European Union and the United States have reached a new deal that should prevent EU regulators from restricting data transfers by companies across the Atlantic.

Both sides have been rushing to replace the previous data transfer framework Safe Harbour, with the new EU-US Privacy Shield.

Safe Harbour was struck down by the European Court of Justice over concerns about mass surveillance by the US on foot of a complaint taken against Facebook through the Irish courts by Austrian privacy campaigner Max Schrems.

The move left thousands of companies in legal limbo.

The announcement of the pact, which still requires political approval, coincides with two days of talks in Brussels by European data protection authorities.

European Commission spokesman Christian Wigand said "we have a deal", aptly making the statement on Twitter.

Also taking to the social networking site, Commission Vice President Andrus Ansip said: "Deal on concluding negotiations on former Safe Harbour, new secure framework for data."

The EU executive did not provide details.

EU regulators were poised to restrict data transfers because of concerns about US surveillance practices, but indicated that if a new deal were in place by the end of the meeting it should prevent legal proceedings against companies.

Sources said earlier the new pact would include stronger oversight of companies' compliance and explicit guarantees from the US that access to data about EU citizens would be subject to clear safeguards and limitations.

For 15 years, Safe Harbour allowed more than 4,000 companies avoid cumbersome EU data transfer rules by stating that they complied with EU data protection law.

EU law bars firms from transferring the personal data of EU citizens to countries outside the European bloc deemed to have insufficient privacy safeguards - such as the US.

Cross-border data transfers are used in many industries for sharing employee information, when consumer data is shared to complete credit card, travel or e-commerce transactions, or to target ads based on customer preferences.

Minister for European Affairs and Data Protection Dara Murphy has welcomed the agreement.

"Today's agreement between EU and US authorities on a new framework for transatlantic data flows is good news for citizens," Mr Murphy said. 

"The new agreement will safeguard our fundamental right as EU citizens to the protection of our data privacy and personal data.

"It will ensure that these protections are fully respected when our data is transferred outside of the EU, in this case, to the United States," he added.

Speaking following the announcement of the new framework, President of the American Chamber Bob Savage said: "This is a very important development that should benefit both businesses and individuals.

"Cross-border data flows are an essential element of modern commerce that facilitate business transactions, innovation, economic growth and job creation.  

"The announcement of this new agreement goes a long way to eliminating uncertainty, and allowing businesses to plan effectively," Mr Savage added.

Click here for a comprehensive explanation of what the EU-US Privacy Shield is by our Science and Technology Correspondent Will Goodbody.