* Mali, Tuareg separatists sign peace deal
* Draft deal had been blocked by Malian government
* Agreement would pave the way for planned July 28 election (Recasts with agreement being signed)
By Mathieu Bonkoungou
OUAGADOUGOU, June 18 (Reuters) - Mali signed a ceasefire deal with Tuareg separatist rebels on Tuesday, paving the way for government troops to return to the northern, rebel-held town of Kidal before a presidential election next month.
At the heart of a region plagued by poverty and Islamic militancy, Mali won a 3.25 billion euros ($4.35 billion) Western aid package last month aimed at shoring up democracy and helping it recover from a coup and an al Qaeda insurgency.
Tuesday's agreement - reached after nearly two weeks of talks mediated by regional powers, the United Nations and the European Union - foresees rebel groups disarming as part of a broader peace process to resolve Tuaregs' longstanding demands for greater autonomy for northern Mali.
"The signing of this agreement represents a significant step in the stabilisation process in Mali," said U.N. Special Representative to Mali Bert Koenders, who attended the signing ceremony in neighbouring Burkina Faso's capital Ouagadougou.
The government in the capital Bamako has made clear that it wants its civilian administration and army reinstated in the rebel stronghold before the July 28 vote, which is meant to complete a democratic transition after the coup of March 2012.
French Foreign Minister Laurent Fabius and the European Union's foreign policy chief Catherine Ashton both welcomed the accord. "I call on all sides in Mali, united by this deal, to implement this agreement in its entirety for the greater good of their country," Fabius said in a statement.
TUAREG STRONGHOLD
Tuareg separatists regained control of Kidal, their traditional fiefdom, after Islamists withdrew following a French-led military campaign that ended the 10-month occupation of the northern two-thirds of Mali by al Qaeda-linked fighters.
The Malian army had threatened to seize back the town if no agreement was reached. It advanced towards Kidal in early June, capturing the village of Anefis in the first clashes in months with the MNLA Tuareg separatist rebels.
Mediators have worked round the clock to salvage the ceasefire deal after Mali's interim president, Dioncounda Traore, last week balked at a draft that imposed conditions on the army's return to Kidal.
Mali's minister for territorial administration, Colonel Moussa Sinko Coulibaly, signed the deal on behalf of the government, a Reuters witness at the ceremony said.
Representatives of two separatist Tuareg groups inked the agreement, witnessed by the mediators at the Burkina Faso presidential palace.
Mali's chief negotiator Tiebile Drame had told Malian state radio earlier on Tuesday the deal would allow Malian troops to return to Kidal swiftly, followed by civilian administrators.
"Now what remains is to agree on the practical details of the deployment," Drame said. "Everyone also agreed to implement the other key element of the consensus, namely the requirement that armed groups in northern Mali give up their weapons."
There is widespread opposition in Bamako to any deal that would make concessions to the MNLA.
The group is blamed by many in southern Mali for opening the door to the Islamists with an uprising last year, and its leaders face arrest warrants for alleged crimes committed during their occupation of the north.
($1 = 0.7467 euros) (Additional reporting by Tiemoko Diallo in Bamako; Writing by Bate Felix; Editing by Daniel Flynn and Mark Trevelyan)
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