The Conservatives have reached an agreement with the Democratic Unionists which will see them support Theresa May’s minority government.

The deal, which comes two weeks after the election resulted in a hung Parliament, will see the 10 DUP MPs back the Tories in key Commons votes.

There will be £1bn extra for Northern Ireland over the next two years.

DUP leader Arlene Foster said the “wide-ranging” agreement was “good for Northern Ireland and for the UK”.

A three page document outlining the terms of the agreement has been published in full. The DUP said it would apply for the lifetime of the Parliament, scheduled to last five years, but would also be reviewed at the end of the current session in two years time.

There will be £1.5bn in funding – consisting of £1bn of new money and £500m of previously announced funds – to be spent over the next two years on infrastructure, health and education in Northern Ireland, money Mrs Foster said was needed to address the challenges from Northern Ireland’s “unique history”.

As part of the deal, the treatment of military veterans in Northern Ireland will be improved while the triple lock guarantee of 2.5% spending on pensions, and existing universal winter fuel payments, will be maintained throughout the UK.

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Mrs May shook hands with DUP leader Arlene Foster as she and other senior party figures arrived at Downing Street on Monday to finalise the pact.

The two leaders then watched as Conservative chief whip Gavin Williamson and his DUP counterpart Jeffrey Donaldson signed the documents in No 10.

The Press Association quoted Mrs Foster as saying she was “delighted” with the arrangement while Mrs May believed the pact was a “very good one”.

“We share many values in terms of wanting to see prosperity across the UK, the value of the union, the important bond between the different parts of the UK,” Mrs May said.

“We very much want to see that protected and enhanced and we also share the desire to ensure a strong government, able to put through its programme and provide for issues like the Brexit negotiations, but also national security issues.”

The BBC’s political editor Laura Kuenssberg said it was “deal done” and she was expecting Mrs Foster to give more details in a brief statement outside Downing Street shortly.

Under the so-called “confidence and supply” arrangement, the DUP will line up behind the government in key votes, such as on the Queen’s Speech and Budgets, which would threaten the government’s survival if they were lost.

On other legislation, however, the DUP’s support is not necessarily guaranteed – although the Northern Ireland party is expected to back the majority of the government’s programme for the next two years after many of its more controversial policies were dropped.

Theresa May fell nine seats short of an overall majority after the snap election, meaning she is reliant on other parties to pass legislation, including relating to the terms of the UK’s withdrawal from the EU.

The support of the DUP will give her an effective working majority of 13, given that Sinn Fein do not take up their seven seats and Speaker John Bercow and his three deputies – two of whom are Labour MPs – do not take part in votes.

Several senior Tories had advised her to govern without any formal agreement with the DUP, arguing the unionist party would not be prepared to bring Mrs May down and run the risk of triggering a fresh election given their longstanding hostility to Jeremy Corbyn and other senior Labour figures.

Former PM Sir John Major warned that a formal association with the DUP could undermine attempts to restore power-sharing government in Northern Ireland while some MPs said the DUP’s socially conservative stance on issues such as gay marriage and abortion could damage the party in the longer term.

Labour have demanded details of how much the deal will cost UK taxpayers and what financial promises have been made.