Hoshiyar Zebari said the central government had agreed for the time being to resume payments from the federal budget for Kurdish civil servants' salaries.
Zebari, who is a Kurd, described the step as a "major breakthrough" that would reduce friction between the KRG and Baghdad. He said the payments would cover October and then November.
The deal was reached after talks between Iraqi Oil Minister Adel Abdel Mehdi and Kurdish Prime Minister Nechirvan Barzani in the Kurdistan region on Thursday.
Baghdad stopped paying for KRG civil servant salaries in protest against the Kurds' exporting oil to Turkey independently, informed Report.
Under the agreement, Iraqi Kurdistan will give 150,000 barrels per day of oil exports - equal to around half its overall shipments - to the federal budget.
In Arbil, the Kurdistan Regional Government (KRG) confirmed the agreement.
"What they have agreed is that Baghdad will release some funds - $500 million - and the KRG will give 150,000 barrels per day of oil to Baghdad," KRG spokesman Safeen Dizayee told Reuters.
He said a KRG delegation headed by the prime minister would travel to Baghdad soon to hammer out a more comprehensive deal and the regional government would not hand over control of exports to Baghdad.
A similar agreement was proposed in April but never advanced to a deal.
In July, then Iraqi foreign minister Zebari said the Kurdish political bloc withdrew from the national government in protest against Prime Minister Nuri al-Maliki's accusation that Kurds were harbouring Islamist insurgents in their capital.
The Kurds later rejoined the administration. But tensions persisted.