The fee for Essien is believed to be around £26m (€38.3m).

Chelsea confirmed the deal in a statement on their website www.chelseafc.com which read: "Chelsea can confirm it has now reached an agreement with Lyon for the transfer of Michael Essien.

"Michael has also agreed personal terms and passed a medical. The transfer is a club record for Chelsea and we would all like to welcome Michael to the club."

Essien refused a new contract at Lyon and made no secret of his distress at being refused permission to leave, until club president Jean-Michel Aulas softened in his stance.

The combative midfielder has helped Lyon win the French title in the past two seasons and his addition gives Chelsea’s midfield a formidable look.

Chelsea have been pursuing Essien throughout the summer, although Lyon offered them no encouragement.

While there were several meetings between club officials, Lyon and Chelsea turned the negotiations into an unseemly squabble over the player, with Aulas doing much of the verbal jousting.

He accused Chelsea of not taking Lyon seriously, despite them being four-times back-to-back French champions, saying: “The club took us for narrow-minded Frenchmen with a beret and a baguette.”

Nevertheless Aulas succeeded in driving up the price from an initial offer of £10m (€14m) to a price which matches the club record fee Chelsea paid for Didier Drogba last summer.

He had put a price of £31million, plus a player, on Essien’s head, which Chelsea refused to match.

Lyon manager Gerard Houllier described Essien as a player in the same class as Steven Gerrard, Frank Lampard, Michael Ballack and Patrick Vieira.

Yet Houllier, appointed this summer, was unable to field Essien in a competitive match as club and player agreed it was in their combined interests to resolve his future.

Essien threatened to go on strike and scoffed at the suggestion from Aulas last week that he should sign a new, improved contract.

The breakthrough arrived on Sunday night when Aulas, having bartered Chelsea up to what Lyon considered a fair price, admitted Essien would have to go.

The saga took another, albeit minor, twist when the relevant documentation to allow the deal to be completed was slow in arriving at Chelsea.

But with that issue soon resolved Chelsea were able to take their summer spending to £56m (€82.6m) after the captures of Lassana Diarra, Shaun Wright-Phillips and Asier del Horno.

His arrival will spark greater competition for places, with Chelsea already blessed with quality midfielders.

Frank Lampard, Claude Makelele, Joe Cole, Damien Duff, Arjen Robben, Wright-Phillips, Diarra, Geremi and Tiago are all available to Jose Mourinho.