The deal, originally announced by the Blades four days ago, was then held up by a dispute over a sell-on clause.

Last night, Barnsley confirmed in a statement that they will pocket in excess of £500,000 for the player who would have been entitled to leave as a free agent next summer.

They also revealed that Howard had been the highest-paid player on the books at Oakwell since arriving from Swindon Town three years ago, but had no desire to sign a new deal.

Contrary to reports, there had been no offers from any other clubs for Howard in the summer and only one other bid this week – which was accepted by the club but not the player.

Barnsley also refuted rumours of a fall-out between Howard and manager Simon Davey.

"This is simply untrue," read the statement. "Simon has always had the highest regard for Brian as a player and a captain and has played him in every match this season until it was confirmed by the player directly that he was irrevocably committed to moving on.

"When Brian Howard signed on a free transfer from Swindon, he became the highest paid player at the club at that time. When he signed his last contract at the club on July 1, 2007, he became the highest paid player at the club at that time. In the event that Brian Howard had agreed to enter negotiations for a new contract, the board were prepared to make him the highest paid player today."

Under the terms of the loan, Howard will not be able to play for the Blades against Barnsley in next month's Championship game at Oakwell. However, he will go straight into Kevin Blackwell's squad for tomorrow's game against Bristol City at Bramall Lane and could make an instant debut because of an injury to midfielder Greg Halford.

The Blades, who will sign the player on a permanent basis when the transfer window re-opens in January, paved the way for the deal by increaseing the percentage payable to Barnsley from any future sale of the midfielder.

They will initially pay a loan fee of £200,000 followed by a further £300,000 in January. If Howard helps the Blades win promotion to the Premier League, that figure is likely to rise by another £100,000.

The Blades issued a statement last night asking for 'the understanding of both sets of fans after what have been difficult but co-operative negotiations'.

It had been agreed that Barnsley should be responsible for publicising all details of the agreements and the Blades would make no further statement.

Barnsley manager Davey admitted that Howard's departure was a loss to the Tykes, who are currently bottom of the Championship ahead of tomorrow's South Yorkshire derby against Doncaster Rovers.

"Brian has been a fantastic servant to this club and he will be missed but we have to look to the future," said Davey. "I have to look after what I have got in my group and who will be available for me on Saturday and in the future."