Facebook has buried the hatchet with Zynga, the social gaming group behind FarmVille, with the pair signing a five-year "strategic relationship". The two companies had been at loggerheads over the credits used in Zynga's games which are played on the social networking site.

FarmVille allows gamers to cultivate their own digital farm, from growing crops to tending animals. While it is initially free, they can then buy virtual credits ? with real money ? to develop their plot.

Zynga was unhappy when Facebook recently changed its terms to take a 30 per cent cut of the credits sold on its site, when it introduced Facebook Credits. The companies are believed to have clashed over the changes, with reports emerging that the social networking giant was considering removing Zynga games from its site.

Yet they have put their differences aside and signed a peace treaty, it emerged yesterday. This will allow them to "increase their shared commitment to social gaming on Facebook and expand the use of Facebook Credits in Zynga's games".

They released a joint statement announcing the decision to enter "a long-term relationship", saying "the agreement provides a solid foundation for both companies to continue to work together". Terms of the agreement were not revealed.

Mark Pincus, the founder and chief executive of Zynga, which was founded in 2007, said: "Facebook was a pioneer in opening their platform in 2007 and in just three years tens of millions of Facebook users play our games every day." The company, whose investors include LinkedIn's chairman Reid Hoffm

Research by former Goldman Sachs and Sanford Bernstein analysts this month said Zynga would be worth $5bn if it were publicly traded. From revenue estimates, they exect the group to hit $1bn in revenues by 2012.an, said it has over 230 million monthly active users playing its games.