This landmark deal could clearly define the distinction between Church and State in Greece.
The Orthodox Church in Greece has played a crucial role in public life for years and for many Greeks, their national pride goes hand-in-hand with their religion.
This deal was agreed upon in Athens between Archbishop Ieronymos of the Church of Greece and Greek Prime Minister Alexis Tsipras. Under the deal, the state will in the future transfer an annual state subsidy to a special fund for the church to pay priests' salaries.
Under the new deal, an annual payment of around €200 million will be paid regardless of if the Church increases or reduces the number of priests. In return, the Church of Greece has agreed not to oppose a motion to make Greece religiously neutral.
The two leaders said Greece will continue to pay clergy salaries but no longer as civil servants. In 2015, 18% of the Greek workforce was employed by the government, according to the OECD.
The agreement also aims to settle decades-long property disputes between Greece and the Church of Greece, which is one of the country's largest real estate owners, Reuters said.
The country has been one of the European Union's weakest performing economies since a debt crisis was triggered following the 2008 global financial meltdown. Creditors for Greece have urged the government to sell assets and reduce the number of public employees in order to pay back the country's external debt.
This agreement must still be approved by the cabinet, parliament and church leaders. The agreement coincides with discussions in the Greek parliament to revise the country's constitution.
According to Reuters, Tsipras assured the Archbishop that the autonomy of the Church will be protected regardless of any constitutional change.