Countries have agreed a deal in Durban to push for a new climate treaty, salvaging the latest round of United Nations climate talks from the brink of collapse.

The UK's cimate change secretary, Chris Huhne, hailed the deal, finally struck in the early hours of Sunday after talks had overrun by a day and a half, as a "significant step forward" that would deliver a global, overarching legal agreement to cut emissions. He said it sent a strong signal to businesses and investors about moving to a low-carbon economy.

But environmental groups said negotiators had failed to show the ambition necessary to cut emissions by levels that would limit global temperature rises to no more than 2C and avoid "dangerous" climate change.

The EU had come to the talks in Durban, South Africa, calling for a mandate to negotiate a new legally binding treaty on global warming by 2015, covering all major emitters, in return for the bloc signing up to a second period of emissions cuts under the existing Kyoto climate deal.

But talks were plunged into disarray after the EU clashed with India and China in a series of passionate exchanges over the legal status of a potential new agreement, putting more than a year of talks between 194 countries in jeopardy.

In the third consecutive all-night session, exhausted ministers had more or less agreed on a series of measures aimed at protecting forests, widening global markets and establishing by 2020 a $100bn fund to help poorer countries move to a green economy and cope with the effects of climate change. But the crucial issue at the talks was whether a new agreement on protecting the climate should have full legal force.

Connie Hedegarrd, the EU climate change commissioner, said she was prepared to offer developing countries the prize they had sought for many years – a continuation of the Kyoto protocol, the only treaty that commits rich countries to cut greenhouse gases. But the price of the offer was for all nations to agree to be "legally bound" to a new agreement by 2020. There were cheers as she said: "We need clarity. We need to commit. The EU has shown patience for many years. We are almost ready to be alone in a second commitment period [to the Kyoto protocol] We don't ask too much of the world that after this second period all countries will be legally bound."

But the Indian environment minister, Jayanthi Natarajan, responded fiercely: "Am I to write a blank cheque and sign away the livelihoods and sustainability of 1.2 billion Indians, without even knowing what the EU 'roadmap' contains? I wonder if this an agenda to shift the blame on to countries who are not responsible [for climate change]. I am told that India will be blamed. Please do not hold us hostage." As countries clashed in the early hours of the morning, scenes in the conference hall resembled a theatre, with wild applause bursting out sporadically.

China's minister Xie Zhenhua made an impassioned speech backing India and accusing developed countries. "What qualifies you to tell us what to do? We are taking action. We want to see your action," he said.

The fate of the talks were, by 2am, hanging on a knife edge, with no resolution likely for many hours. The talks had already overrun by 36 hours.

A deal was reached after the South African president of the talks urged the EU and India to go "into a huddle" in the middle of the conference hall in the early hours of this morning, in a bid to work out language both sides were happy with.

A compromise, suggested by the Brazilian delegation, saw the EU and Indians agree to a road map which commits countries to negotiating a protocol, another legal instrument or an "agreed outcome with legal force".

The treaty will be negotiated by 2015 and coming into force from 2020.
The deal also paves the way for action to address the "emissions gap" between the voluntary emissions cuts countries have already pledged and the reductions experts say are needed to effectively tackle climate change.

Earlier Venezuela's ambassador, Claudia Salerno, had stood on a chair and banged her nameplate as she accused the UN chair of the session of ignoring the views of some developing countries. Referring to the money promised by rich countries to help developing countries to adapt to climate change, she said: "This agreement will kill off everyone. It is a farce. It is immoral to ask developing countries to sell ourselves for $100bn."

The row over the legal status of a new agreement has dogged climate talks for over a decade. Rich countries have wanted rapidly emerging economies such as like China – the world's largest emitter – and India to be equally legally bound as developed countries, though taking on softer targets on emission curbs.

However, developing countries argue that they were not responsible for the bulk of climate change emissions in the atmosphere and argue that they have pledged to rein in their emissions more than the developed countries.

Despite the broad backing of more than 120 countries, including major developing economies such as Brazil, plus the US and Japan, the EU had found it hard to push through its ambitious "roadmap", which would establish a new over-arching agreement that would commit all countries to emission cuts.

China, India and some developing countries had raised a series of objections throughout the talks about the dates that the new treaty would become operational, and argued that the Kyoto protocol would effectively be killed off before a replacement could be put in its place. With Japan, Canada and Russia saying that they were unwilling to sign up to a second period, the EU had become almost alone among developed countries in committing to continue the protocol in some form.

Several countries said they feared the deal on offer would suit the US most because it had always insisted that all other countries should cut emissions and has resisted a legally-binding agreement.

Several developing countries spoke out strongly in favour of the EU proposals, including Brazil and Colombia, rejecting calls to downgrade the legal status of any agreement.