The deal was reached after committee members met privately for more than three hours, trying to hammer out a deal, and announced in a raucous hearing that reflected deep divisions within the party. The sticking point was Michigan, where Obama's name was not on the ballot.
Clinton's camp insisted Obama shouldn't get any pledged delegates in Michigan since he chose not to put his name on the ballot, and she should get 73 pledged delegates with 55 uncommitted. Obama's team insisted the only fair solution was to split the pledged delegates in half between the two campaigns, with 64 each.
The committee agreed on a compromise offered by the Michigan Democratic Party that would split the difference, allowing Clinton to take 69 delegates and Obama 59. Each delegate would get half a vote at the convention in Denver this summer, according to the deal.
They also agreed to seat the Florida delegation based on the outcome of the January primary, with 105 pledged delegates for Clinton and 67 for Obama, but with each delegate getting half a vote as a penalty.
The resolution increased the number of delegates needed to clinch the nomination to 2,118, leaving Obama 66 delegates short but still within striking distance after the three final primaries are held in the next three days.
Obama picked up a total of 32 delegates in Michigan, including superdelegates who have already committed, and 36 in Florida. Clinton picked up 38 in Michigan, including superdelegates, and 56.5 in Florida.
Obama's total increased to 2,052, and Clinton had 1,877.5.
A proposal favored by Clinton that would have fully seated the Florida delegation fully in accordance with the January primary went down with 12 votes in support and 15 against.
Tina Fluornoy, who led Clinton's efforts to seat both states' delegations with full voting power, said she was disappointed by the outcome but knew the Clinton position had "no chance" of passing the committee.
"I understand the rules. ... I can tell you one thing that has driven these rules was being a party of inclusion," Fluornoy said. "I wish my colleagues will vote differently."
The committee unanimously approved a measure supported by the Obama campaign that sat the delegates according to Clinton's winning vote in the Florida contest, but penalized the delegation by allowing each only half a vote.
"We just blew the election!" a woman in the audience shouted. The crowd was divided between cheering Obama supporters and booing Clinton supporters.
"This isn't unity! Count all the votes!" another audience member yelled.
Alice Huffman, a Clinton supporter on the committee, explained that the compromise was the next best thing to full seating.
"We will leave here more united than we came," she said.
Some audience members heckled her in response. "Lipstick on a pig!" one shouted.