Soviet President Mikhail Gorbachev and Russian Federation leader Boris Yeltsin buried their political differences and signed an economic agreement between the central government and the country's largest republic.

The rivals met Tuesday as the Soviet Parliament opened a special session to discuss a crisis budget for 1991, the gulf conflict and a new Cabinet to be appointed by Gorbachev.Vitaly Ignatenko, Gorbachev's spokesman, said the president and Yeltsin had ironed out differences over how much money the Russian Federation should contribute to the central budget, the independent Interfax news service reported.

The official Tass news agency also cited a Gorbachev-Yeltsin accord, quoting Russian Vice President Ruslan Khasbulatov as saying that they had reached "agreement on contentious issues."

Under Yeltsin's aggressive leadership, the Russian Parliament decided two weeks ago to slash its funding of the Soviet budget from the 1990 level of $86 billion to $14.2 billion this year.

Gorbachev said then that the move by Russia, which takes up three-quarters of the Soviet Union and is home to half its 290 million people, could lead to "the destruction of not only the economy, but of the entire union."

Interfax reported that Gorbachev and Yeltsin agreed on a compromise under which Russia will contribute about $48.5 billion to the central government for 1991. That funding level would decrease Russia's share of the national budget from more than half to less than one-third.

Ignatenko said that Gorbachev would present his streamlined Cabinet to the Soviet Parliament on Saturday, along with a revised text of the union treaty the president is promoting as the basis of a revitalized confederation of republics.