LONDON (Reuters) -- Argentina and the British-ruled Falkland Islands
                  ended a 17-year standoff on Wednesday, resuming air links severed after
                  the Falklands war and restoring an "element of trust" between London and
                  Buenos Aires.

                  Argentine Foreign Minister Guido di Tella said an agreement between
                  Britain, the Falklands and Argentina to lift an embargo on visits to the
                  archipelago by Argentinian passport holders and flights from the mainland
                  heralded a new era of relations.

                  Di Tella said Chile had agreed to lift its ban on flights to the Falklands that it
                  blocked after Britain arrested former Chilean dictator Augusto Pinochet last
                  October.

                  "For us it is a very important day, particularly in our relations with Great
                  Britain," Di Tella told a news conference at Britain's Foreign Office. "(The
                  accord) is evidence of the beginning of an element of trust."

                  But British Foreign Secretary Robin Cook stressed that the agreement in no
                  way compromised the sensitive issue of Britain's sovereignty over the
                  islands.

                  Argentina has claimed "Las Malvinas" since 1833 and tried forcibly to regain
                  in 1982.

                  "There is nothing whatsoever in this agreement which compromises the
                  position either of Britain or Argentina in relation to sovereignty," Cook said.

                  In 1982, Argentina's military rulers sent in troops to enforce Buenos Aires's
                  sovereignty claim. But the invasion force surrendered to a British task force
                  after a 10-week war in which 1,000 British and Argentine servicemen died.

                  Democracy was restored in Argentina in 1983 and diplomatic relations with
                  Britain were revived seven years later. Ties between the two countries were
                  cemented last year when Argentine President Carlos Menem made a
                  landmark visit to Britain.

                  Di Tella said the agreement backed the resumption of flights from Chile to
                  the Falklands -- which will be allowed to stop in Argentina en route to the
                  islands. There is currently just one flight a week to the islands from Britain.

                  "We have talked with the Chilean government and they have said they would
                  concur to make possible everything that we have signed this morning here,"
                  Di Tella said.

                  Issues of fish poaching and fishery stocks in the South Atlantic would also be
                  studied under the deal, he said.

                  Cook said that a monument to Argentines killed during the conflict would be
                  built following the agreement but said that no Argentine flag would be
                  hoisted on any part of the island.

                  A hard core of Falklanders are opposed to any contact with Argentina.
                  Some 300 people protested in the Falkland capital Port Stanley against the
                  negotiations on Sunday, burning an Argentine flag.

                  However Falkland Islanders said the demonstrators were a minority group
                  and that the deal was a step forward.

                  "Significant progress has been achieved," the Falkand Island government
                  said in a statement. "We believe we have secured what is in all
                  circumstances a good deal for the Falkland Islands."