The ten-page long-term agreement pledges US support for Afghanistan for a decade after 2014, when NATO forces are planning to conclude their combat role. Obama, who arrived in Kabul in the middle of the night on Tuesday called the agreement "a historic moment for our two nations."
"I`m here to affirm the bond between our two countries and to thank Americans and Afghans who have sacrificed so much over these last ten years.
"Neither Americans nor the Afghan people asked for this war yet for a decade we`ve stood together. Today with the signing of the strategic partnership agreement we look forward to a future of peace. Today we`re agreeing to be long-term partners," he said.
With this agreement, the US President said the Afghan people and the world should know that Afghanistan has a partner in the United States.
"As we move forward I`m confident Afghan forces will grow stronger and the Afghan people will take control of their future....," he said.
According to a White House fact sheet, the Strategic Partnership Agreement is not only a signal of US` long-term commitment to Afghanistan, but it enshrines their commitments to one another and a common vision for their relationship and Afghanistan`s future.
The SPA is a legally binding executive agreement, undertaken between two sovereign nations.
US commitments to support Afghanistan`s social and economic development, security, institutions and regional cooperation are matched by Afghan commitments to strengthen accountability, transparency, oversight, and to protect the human rights of all Afghans - men and women, it said.
In addition to recognising the progress that has been made together over the past 10 years, the agreement includes mutual commitments in the areas of, protecting and promoting shared democratic values, advancing long-term security, reinforcing regional security and cooperation, social and economic development and strengthening Afghan institutions and governance.
"When it comes to an enduring US presence, President Obama has been clear: we do not seek permanent military bases in Afghanistan. Instead, the Strategic Partnership Agreement commits Afghanistan to provide US personnel access to and use of Afghan facilities through 2014 and beyond," the fact sheet said.
"The Agreement provides for the possibility of US forces in Afghanistan after 2014, for the purposes of training Afghan Forces and targeting the remnants of al-Qaeda, and commits the US and Afghanistan to initiate negotiations on a Bilateral Security Agreement to supersede our current Status of Forces Agreement," it said.
Under the agreement, the US will also designate Afghanistan a "major non-NATO Ally" to provide a long-term framework for security and defence cooperation.
The White House said the agreement itself does not commit the US to any specific troop levels or levels of funding in the future, as those are decisions that will be made in consultation with the US Congress.
It does, however, commit the US to seek funding from Congress on an annual basis to support the training, equipping, advising and sustaining of Afghan National Security Forces, as well as for social and economic assistance, it said.
While fully supporting the Afghan-led reconciliation process, the SPA reiterates the red lines for any talks with the Taliban- break ties with al-Qaeda, renounce violence and abide by the Afghan constitution including its protection for all Afghan men and women.
"Finally the Strategic Partnership establishes implementing arrangements and mechanisms to ensure that we are effectively carrying out the commitments we`ve made to one another. To ensure the Strategic Partnership is effectively implemented, the Afghanistan-United States Bilateral Commission will be established, chaired by foreign ministers or their designees," it added.