European Council President Charles Michel on Tuesday declared a political crisis in Georgia resolved, but defiant opposition groups called for new protests and an ex-president announced his return from exile to oust the ruling party.

Georgia, an ex-Soviet country in the Caucasus with aspirations to join the European Union and NATO, has been caught in a standoff since disputed parliament elections October.

The opposition accused the ruling party of rigging the vote and refused to take their seats in parliament creating a crisis that saw the opposition's most prominent figure was arrested and the prime minister resign.

After several false starts, Michel's diplomatic efforts to resolve the crisis brought about an agreement Monday between the ruling Georgian Dream party and opposition groups.

"The political crisis is over and constructive political engagement needs to be sustained," Michel said Tuesday on a visit to the capital Tbilisi.

"More hard work starts today. The agreement presents a robust foundation for reforms. Election reform, justice reform, and consolidating the rule of law remain key priorities in EU-Georgia relations."

However the main opposition force, the United National Movement (UNM) said it would only join the deal after its chairman Nika Melia is released from pre-trial detention and vowed fresh anti-government demonstrations.

"Opposition parties will hold a mass protest rally on May 15," Ako Minashvili, a UNM leader told AFP, against "the persecution of political opponents and electoral fraud".

Such demonstrations have broken out regularly since October and opposition lawmakers joined in to demand snap polls.

The stalemate worsened in February after police arrested Melia in a violent raid on his party headquarters, leading to the prime minister's resignation and Western condemnation.

European Council President Charles called for constructive engagement in Georgia at a press conference with President Salome Zurabishvili
European Council President Charles called for constructive engagement in Georgia at a press conference with President Salome Zurabishvili Georgia's Presidential press service / Handout

The refusal by UNM and another opposition party, European Georgia, to sign the pact and to end their parliamentary boycott means around 40 seats will remain vacant in Georgia's 150-member legislature.

Georgia's exiled ex-president and UNM's founder, Mikheil Saakashvili, urged his party to sign the agreement despite its "serious shortcomings" and to enter parliament after Melia's release from custody.

In an announcement expected to inject further drama into Georgia's unpredictable political landscape, Saakashvili said Tuesday he will return from exile in Ukraine ahead of local elections this year.

"I will return to Georgia to be physically with you, regardless of what risks there are to my life and freedom," he said in televised remarks from the Ukraine where he chairs the government's advisory body on reforms.

Georgia's pro-Western president in 2004-2013, Saakashvili was sentenced in 2018 by a Georgian court to six years in prison for alleged abuse of office, a ruling he denounced as politically motivated.

Officials have warned that Saakashvili will be arrested if he returns.

His conviction and charges brought against his allies by the Georgian Dream government have prompted criticism from the West.

The deal drafted by Michel commits opposition parties to enter parliament while Georgian Dream has pledged sweeping political, electoral and judicial reforms.

Under the agreement the ruling party pledged to resolve cases of "perceived politicised justice" through amnesties or similar measures within a week.

That clause concerns the criminal case against Melia, who faces charges of organising mass violence during anti-government protests in 2019.

The agreement dictates that early parliamentary elections be called in 2022 if the Georgian Dream party scores less than 43 percent in upcoming local elections.

Addressing Georgia's political leaders, Michel said "the agreement was reached in a truly European spirit and takes you towards your Euro-Atlantic future."

The Georgian government has announced plans to apply for EU membership in 2024.