By Laurence Norman in Brussels and Emre Peker in Istanbul 

BRUSSELS--The European Union reached a deal on Sunday with Turkey's government in which Ankara would take steps to cut the flow of migrants into Europe in exchange for EU cash and help with its bid to join the 28-nation bloc.

EU leaders hailed the agreement as a key step toward substantially reducing the number of asylum seekers entering the bloc, while Turkey's Prime Minister Ahmet Davutoglu said Sunday's summit marked a historic "new beginning" in often fraught relations between Brussels and Ankara.

Yet the continued absence of trust on both sides remained evident. Under the agreement, the EU would review on a monthly basis Turkey's compliance with its side of the deal, officials said. EU governments were still at loggerheads over who would pay the EUR3 billion ($3.19 billion) Turkey is supposed to receive for its cooperation.

At the heart of the migration deal are Turkey's promises to tighten its border controls in exchange for cash and other benefits from the EU. Those include speeding up work on Turkey's EU membership bid and a new push to help Ankara win visa-free access to the bloc for its citizens.

The EU has been pressing Turkey to tighten controls on its borders with Greece for some time. Formal talks started in September.

Under the deal, Turkey would toughen its patrols in the Aegean Sea and on the land borders with Greece and Bulgaria, as well as cracking down on human-trafficking gangs. Ankara would agree to take back to Turkey migrants whose asylum claims are denied by EU countries.

Migrants and refugees have crossed the sea from Turkey into Greece in the thousands in recent months, making Greece's eastern islands, one of the main entry points for the biggest influx of migrants since the end of World War II. Already this year, more than 700,000 migrants, mainly Syrian, have arrived in the EU via Turkey, according to the International Organization of Migration.

The EU has still to work out how to provide financial support for Turkey.

"We need EUR3 billion," European Commission President Jean-Claude Juncker said on his way into the summit. Of that sum, the European Commission would come up with EUR500 million and national EU governments should agree on how to come up with the rest at a later date, Mr. Juncker said.

However, underlining the continued lack of trust between Ankara and the EU, much of the focus ahead of the summit had been on how to guarantee the other side will keep its pledges. Diplomats noted the absence of Turkey's President Recep Tayyip Erdogan from the meeting.

Turkish Prime Minister Ahmet Davutoglu, who on Friday formed a new government in Ankara, said Sunday's summit was a historic day to advance the country's bid to join the EU and to work with the bloc on geopolitical challenges including the migration crisis.

"I am thankful to all European leaders for this new beginning," Mr. Davutoglu said as he arrived for the meeting.

But German Chancellor Angela Merkel, in comments ahead of the meeting, said the result of Turkey's EU membership negotiations were "open."

The first EU-Turkey summit in 11 years comes as Ankara faces diplomatic and security challenges from Moscow following the downing of a Russian warplane on Tuesday.

While a joint response to the refugee crisis is top of the agenda, the Turkish delegation is expected to press European counterparts on broader geopolitical issues led by the Syrian conflict, the fight against Islamic State and Russia's increasingly assertive military operations in support of the Damascus regime just south of Turkey's border.

On Thursday, Turkey's EU Affairs Minister Volkan Bozkir said Ankara and the EU would start talks covering economic and monetary policies as soon as Dec. 14-15. Turkey and the EU have started negotiations on 14 of the 35 policy criteria that Ankara must fulfill to join the bloc.

While the refugee crisis has strengthened Ankara's hand in negotiations, domestic developments in Turkey are complicating its efforts.

Two prominent Turkish journalists were jailed on Thursday, pending trial, in connection with a report alleging Turkey has shipped weapons to Syrian rebels, which the government had repeatedly denied.

Their arrests follow the government's seizure of opposition media outlets before elections in November. The U.S. and EU sharply criticized the moves.

Tom Fairless contributed to this article.

Write to Laurence Norman at laurence.norman@wsj.com and Emre Peker at emre.peker@wsj.com

(END) Dow Jones Newswires

November 29, 2015 16:54 ET (21:54 GMT)