Bimal Gurung formed the Gorkha Janamukti Morcha pressure group in 2007 and rebelled against the Council and the state government.
The agreement between the federal government, the state of West Bengal in India's east and a political group leading the Gorkha protesters was to be inked later Monday in a village about 600 kilometres (380 miles) from Kolkata.
Indian Gorkhas, who are ethnic Nepalese, have led a violent campaign for the past two decades demanding the separate state of Gorkhaland carved from West Bengal's hilly district of Darjeeling.
The newly created Gorkhaland Territorial Administration will have powers to manage public works, social welfare, health and forests in administrative areas under its mandate.
"The agreement will end the violence in the hills of Darjeeling and pave the way for development," said newly elected West Bengal chief minister Mamata Banerjee.
"We have plans to develop the hills of Darjeeling and its surrounding areas on the lines of Switzerland,"