Updated with details, Dr Muscat's comments - The government has announced further changes to the citizenship scheme, including the introduction of a requirement for residence status for one year.
The changes were announced by the prime minister this evening. They were agreed with the European Commission.
Dr Muscat said the changes would be reflected in a new legal notice.
"This is a reasonable agreement with those who wanted to reach agreement with us," Dr Muscat said, adding that the government had said the same things to the opposition, but it refused to agree.
He said that as a result of the changes, applicants would need to wait at least a year to get citizenship, as compared to a minimum of six months before.
Dr Muscat explained that applicants who bought or rented a property in Malta would be given residence status and an ID card would be issued. They would not need to live in Malta for a full year, but this did not mean that they would not come to Malta, Dr Muscat said.
The European Commission also agreed that the government may raise the current capping of applicants from 1,800.
This is the third change to the scheme, officially called the Individual Investor Programme.
The government over the past week held technical talks with the European Commission in the wake of a European Parliament resolution which was critical of Malta's scheme.
European Commissioner Viviane Reding had warned that the Maltese scheme breached EU and international law, a claim which the government denied.
The talks with the commission focused on the need to ensure that those who were granted Maltese citizenship had genuine links with the country by having residence status in Malta prior to the possibility to Maltese naturalisation.
In the first change to the scheme, the government had promised to delete secrecy provisions.
Following the second change, apart from the original €650,000 donation, applicants were bound to purchase a property worth at least €350,000 or pay an annual rent of €16,000, coupled with an investment of €150,000 in government stocks or bonds.
FIRST PN REACTION
In an initial reaction, PN council president Ann Fenech said the government had to bow to pressure from the European Union and international law, which laid down that those granted citizenship had to have an effective link with their new country.
Had the government heeded the opposition about the need to include a residence requirement, a lot of unnecessary trouble would have been avoided, she said.
(See Dr Busuttil's reaction in separate story)
AD REACTION
Alternattiva Demokratika welcomed the introduction of the residence requirement.
"We are happy to see that residence has now become a condition before the granting of Maltese and EU citizenship. It is good to see that such changes will eliminate any breaches of the EU treaties, in particular the article 4.3 on the principle of loyal cooperation. We deplore the childish and obstinate behaviour of our political leaders who have caused serious damage to our country's reputation during the past three months," party leader Arnold Cassola said.
"We also call for clear procedures to be put in place so that people who contribute to the country's development and children with no nationality, who though not rich contribute to this country's well being are able to apply and be granted citizenship according to clear guidelines and not depend on the Minister’s discretion. May this serve as a good lesson to Maltese politicians for the future: always put our country's interest before your egoistic political party needs".