Mayor Bloomberg and the head of the city’s teachers union late last night announced that they have reached a tentative deal on a new contract for the union’s 120,000 members — a year before the old contract expires.

The negotiations are a stark contrast to the last round, which was a bitter and public fight. The new contract, which must be ratified, would raise teachers’ salaries 7.1% over two years, including a $750 lump sum payment at the beginning of next year. It would also include a new peer intervention program that would permit tenured teachers who are struggling to be evaluated by an independent third-party entity.

The two sides also created a new program that allows the city to buy out the contracts of “extra” teachers who voluntarily come forward. The program would allow the city to remove from the payroll teachers who don’t have classroom assignments, a provision the administration has aggressively pushed for.

The new contract expires on October 31, 2009.

The last agreement was ratified in November 2005, two and a half years after the contract expired. It increased teacher salaries by 15% and lengthened the workday.

Yesterday, both sides billed the latest agreement as an unprecedented victory because it came so early. They said it would allow them to focus on quality teaching and on advocating for an end to the longstanding Campaign for Fiscal Equity lawsuit.

“We said when we came into office education was our number one priority, and I think we can say we put our money where our mouth is,” Mr. Bloomberg said. “The reforms and productivity improvements we implemented as part of the current agreement have started to yield real results and negotiating a contract of this duration will bring much-needed stability to our schools over the next three years,”

The deal marks the first time a union contract has been settled early during the Bloomberg administration, and possibly since the 1970s, according to the city’s labor commissioner, James Hanley.

“We have achieved something unprecedented. We have reached tentative agreement 11 months in advance,” the United Federation of Teachers president, Randi Weingarten, said. “This was a very quiet one this time, and the mayor has often said to me we get a lot more work done when we roll up our sleeves … and do things in a very quiet way.”

Mr. Hanley said the two sides had been negotiating the agreement intensely since August. It is based on the contract with the District Council 37, the largest municipal union in the city, which was ratified in July and included raises of more than 10% over 32 months. The DC 37 contract traditionally sets the pattern for other unions.

Teachers’ salaries will rise 2% effective October 13, 2007, and 5% after May 19, 2008. By the end of the contract on October 12, 2007, the minimum salary will be $45,530 for new hires and the maximum will be more than $100,000 for the first time.

Pointing to a total increase in teacher salaries of more than 40% since 2002, Ms. Weingarten said, “Finally we are making real progress.”