The announcement marks a breakthrough in the leaders' monthlong political standoff sparked by President Viktor Yushchenko's decree to dissolve parliament and call early elections.
Prime Minister Viktor Yanukovych and his parliamentary majority had defied the decree and called instead for simultaneous parliamentary and presidential elections.
Speaking today to supporters on Kyiv's Independence Square, Yanukovych said that holding "democratic and fair elections" is the only way to solve the crisis. He said details needed to be worked out.
Yushchenko told reporters that the vote is likely to take place within the next two months.
"In order to hold [elections] in a democratic and fair way, we have to go through all pre-election procedures," Yushchenko said. "The whole technical process has to be estimated, which includes holding party conventions, registering party lists, setting up district commissions, printing campaign materials and taking other steps necessary for the preparation of democratic elections. This may take up to 60 days."
Yushchenko said the two leaders agreed to create a working group that will set the stage for the election.
(with material from agency reports)