The Bloomberg administration and the City Council announced a compromise yesterday on the financing for the project to remake Manhattan’s far West Side.

For months, the Republican mayor and the Democratic-majority council have been wrangling over how to pay for the project, which would turn the empty lots and industrial buildings that now dot the 59-square-block area into a commercial and residential neighborhood. They also have clashed on whether to proceed with the stadium, known as the New York Sports & Convention Center, that Mayor Bloomberg has been pushing as a home for the New York Jets football team and, the mayor hopes, a principal venue for the 2012 Olympics.

Yesterday, the council speaker, Gif ford Miller – a Democratic mayoral candidate – called the revised version of the development plan more “fiscally responsible” and said it was “neutral to the stadium.”

“This is a project that is separate from the stadium,” he told reporters during an unusually well-attended news conference in City Hall. “And, in fact, no funds developed from this project can be used to support the stadium or the convention center.”

The agreement cleared the way for the council’s Committee on Land Use to approve rezoning of the area. Had the committee failed to vote by today, the deadline under the City Charter, it would have forfeited its chance to shape the project.

The compromise restructures the mayor’s original financing plan in a way that, officials said, will save the city approximately $1 billion but will require it to pay out more money up front, reducing interest payments later. It also increases the amount of low- and moderate-income housing in the development, decreases the amount of commercial space, and provides city financing for the extension of the no. 7 subway line west from Times Square.

On the face of it, the approved plan does not involve the proposed Jets’ stadium and the expansion of the Jacob K. Javits Convention Center, neither of which the council has control over. Yet the projects have been closely tied since they were first proposed.

The council member who represents the area, Christine Quinn, an outspoken opponent of the proposed sports facility, said the changes in no way advanced the mayor’s stadium agenda.

The deal “very clearly states not a penny of the financial resources, not one dollar generated by this rezoning, can be used west of 11th Avenue,” Ms. Quinn said.

“They cannot even – the funds raised from this rezoning – be used to build a tunnel from the 7 to the stadium, or a tunnel from the Javits to the stadium,” she said.

Several groups, all against the stadium, issued statements claiming victory, because the approval splits the two projects,taking away the city’s ability to hold redevelopment hostage to the stadium.

“The stadium has been effectively severed from all other proposals and can now succeed or fail on its own merits,” the Hell’s Kitchen/Hudson Yards Alliance said.

Supporters of the Jets’ stadium, however, saw a catalyst where others saw roadblocks.

“The vote today underscores how much momentum there is behind the transformation of the West Side,” a Jets’ spokesman, Matthew Higgins, said.

“The Sports & Convention Center financing was never part of the rezoning in the first place, but if Cablevision wants to claim a hollow victory, God bless them,” he said, referring to the biggest opponent of the arena.

The revised plan does three main things. It decreases the amount of money the city will borrow, to $3 billion from $4 billion; it boosts the number of low- and moderate-income housing units to 3,300 from the originally proposed 2,600; and it decreases the amount of commercial office space, to 24.2 million square feet from 26 million square feet.

The financing has been completely revamped. Mr. Bloomberg’s original plan called for the issuing of $2.8 billion in long-term bonds and $900 million in commercial paper or short-term debt.

The modified version increases short-term spending and reduces borrowing to $2.3 billion in long-term debt and $750 million in short-term debt. As revenue is generated, it will be used to pay down the borrowed principal and further reduce long-term debt service. Debt payments will be made directly from the city’s operating budget and follow a bell-shaped curve, ranging over the next decade from a low of $6 million to a high of $162 million.

A quasi-independent entity called the Transitional Finance Authority will back the city’s $750 million in short-term borrowing. Earlier, the authority was bearing more of the financial burden.

The original plan was called “extremely risky” by the city comptroller, William Thompson Jr., who said it was an “unprecedented” use of the Transitional Finance Authority that didn’t provide for enough accountability.

Mr. Thompson told The New York Sun in a phone interview yesterday that the new agreement transforms what was a “very shaky financing scheme” to a more stable one.

Rather than allowing the mayor to bypass the council and “make unilateral decisions” through the Transitional Finance Authority, the project will now have more transparency, he said.

“This isn’t being done in the backdoor fashion that was occurring before,” Mr. Thompson said of the financing. “It protects the city from kind of an unprecedented raid on our treasury.”

The mayor issued a statement yesterday applauding the deal, saying the development “will strengthen the City’s economy with billions of dollars in new tax revenue.” Unlike the council members, however, he also cited the stadium and the Javits center as part of the imminent boom on the far West Side.

A New York University professor and adviser to Mr. Bloomberg, Mitchell Moss, was more explicit in how the stadium, to be built on a platform over the Hudson Rail Yards, fits into the larger picture.

“There is no benefit to keeping an empty railroad site,” Mr. Moss said. “There’s no reason to allow the rail yard to be barren when the rest of the area is going to blossom.”

The full council was expected to ratify the compromise at its next meeting.