The PGA Tour  announced a shock merger with the Saudi-backed LIV Golf circuit on Tuesday, rocking the golfing world with a bombshell deal aimed at ending the sport's bitter two-year civil war.

In a stunning agreement that took the sport completely by surprise, the US-based PGA Tour and Europe's DP World Tour said they had signed an agreement with LIV's Saudi backers that will lead to the formation of "a new collectively owned, for-profit entity."

"After two years of disruption and distraction, this is a historic day for the game we all know and love," said PGA Tour commissioner Jay Monahan.

LIV Golf was launched in October 2021 and lured top PGA Tour talent with record $25 million purses and money guarantees, bankrolled by Saudi Arabia's Public Investment Fund. Critics said LIV was conceived by the kingdom as a "sportswashing" exercise designed to improve Saudi Arabia's international image, battered after the 2018 murder of dissident journalist Jamal Khashoggi.

The PGA Tour responded by banning LIV players while the DP World Tour has handed out heavy fines to its players.

The rift had led to a series of lawsuits and caused acrimony between players such as major winners Phil Mickelson and Brooks Koepka, who signed lucrative deals with LIV, and those such as Rory McIlroy and Tiger Woods, who remained loyal to the PGA Tour.

Tuesday's deal ends all litigation between the feuding parties, although many other details of the landmark deal remain to be disclosed.

The merger was given swift backing by six-time major winner Mickelson, the most prominent of the defectors to the LIV Tour.

"Awesome day today," tweeted Mickelson above a link to a news story on the merger.

But PGA Tour players were caught cold by the announcement, before later accusing Monahan of "hypocrisy" for joining forces with LIV after spending much of the past year urging players to resist the riches on offer.

US media reported that Monahan was confronted by furious players at a meeting in Toronto on Tuesday ahead of this week's Canadian Open.

"I recognize that people are going to call me a hypocrite," Monahan said later on a conference call, but added that "circumstances do change."

In Washington, a group representing the families of victims of the 11 September 2001 attacks also accused Monahan and the PGA Tour of "hypocrisy and greed."

"Our entire 9/11 community has been betrayed by Commissioner Monahan and the PGA as it appears their concern for our loved ones was merely window-dressing in their quest for money," said Terry Strada, chair of 9/11 Families United, whose husband Tom died in the attacks. Fifteen of the 19 9/11 hijackers were Saudi citizens.

The name of the new merged entity and the precise structure of the tours has yet to be announced, but the PGA Tour said that the parties had agreed to "establish a fair and objective process for any players who desire to re-apply for membership with the PGA Tour or the DP World Tour following the completion of the 2023 season."

'After two years of disruption and distraction, this is a historic day for the game we all know and love.'

The Board of Directors of the new commercial entity will have the Saudi PIF governor Yasir Al-Rumayyan as chairman and Monahan as chief executive officer.

There was noticeably no mention of LIV chief executive Greg Norman in the statements. Norman's combative approach to the conflict had seen him recently snubbed by Augusta National who did not offer him an invite to April's Masters tournament.

In November, McIlroy, who was the most prominent backer of the PGA Tour amongst the players, said that Norman was an obstacle to any deal between the two parties.

"I think Greg needs to go. I think he just needs to exit stage left," said the Northern Irishman. "No one is going to talk unless there's an adult in the room that can actually try to mend fences."

It was unclear if the announcement would impact LIV's current season. The tour's next event is on 30 June at Valderrama in Spain. The PGA Tour statement said that the team element, introduced by LIV, would be part of the future plans.

"Today is a very exciting day for this special game and the people it touches around the world," Al-Rumayyan said.

"We believe there are opportunities for the game to evolve while also maintaining its storied history and tradition. This partnership represents the best opportunity to extend and increase the impact of golf for all."

The announcement comes as Saudi football clubs are poised to make a series of major investments, backed by PIF, to sign big-name players.

On Tuesday, Real Madrid's Ballon d'Or winner Karim Benzema signed for Saudi Arabia's Al-Ittihad for three years starting next season, the Jeddah-based club confirmed.

Benzema will join his former Real Madrid teammate Cristiano Ronaldo in the Gulf kingdom.