The issue affected 2.59 million vehicles and led to the deaths of at least 124 people.

"The mistakes that led to the ignition switch recall should never have happened. We have apologised and we do so again today," said GM CEO Mary Barra. "We have faced our issues with a clear determination to do the right thing both for the short term and the long term."

Under the agreement, the US Attorney's Office agrees to defer prosecution of charges against GM related to the ignition switch defect and recall for three years. If GM satisfies the terms of the agreement, federal prosecutors will then seek dismissal of the charges with prejudice. 

The agreement will require GM to cooperate with the federal government and establish an independent monitor to review and assess the company's policies and procedures in certain discrete areas relating to safety issues and recalls. GM will also pay a $900m financial penalty.