MINNEAPOLIS -- The Minnesota Twins will play next season as part of a deal approved Thursday that settles a lawsuit blocking baseball's contraction plan.

''This definitively removes the Twins from contraction for 2003,'' said Bill Lester, executive director of the Metropolitan Sports Facilities Commission, which agreed to drop its lawsuit against the team and baseball.

A signed settlement will be delivered Friday to Hennepin County District Judge Harry Seymour Crump, said Andrew Shea, a commission attorney. Crump mediated the settlement talks.

''Everybody who wants to keep major league baseball in Minnesota should be happy with this deal,'' said Joe Anthony, a Minneapolis-based attorney for baseball.

In a statement accompanying the settlement, baseball commissioner Bud Selig said the deal signals a commitment ''by all parties to seek to continue the long tradition of the Twins' ballclub.''

''Major league baseball looks forward to working with the Twin Cities and all of Minnesota and their efforts to build a new ballpark and create an operating climate for the Twins that will ensure the continuation of baseball in Minnesota,'' Selig's statement read.

All claims against the Twins will be dismissed, but the stadium commission reserved the right to sue major league baseball if it tries again to eliminate the team.

The commission sued immediately after baseball owners voted Nov. 6 to fold two unidentified. It won a temporary restraining order and later an injunction to force the Twins to play in the Metrodome in 2002.

Selig announced in February that contraction wouldn't occur this season, but he wouldn't rule it out for future seasons. The Twins and Montreal Expos were targeted because of their low revenue and inability to get new stadiums built, management lawyers told the players' association.

The public board continued its lawsuit, claiming baseball interfered with its ability to negotiate a new lease by raising the contraction threat.

Thursday's action buys the state another year to finalize a stadium finance package. The Legislature and Gov. Jesse Ventura already approved a framework for a $330 million ballpark, but it is contingent on the Twins and prospective host cities taking steps to raise the needed funds.

For next season, the Twins will exercise the final one-year option on a 1998 lease agreement. There are no firm arrangements beyond then. Even under an aggressive construction schedule, a new ballpark wouldn't be ready until the 2006 season.

Commission lawyers didn't know what would become of thousands of internal baseball memos and financial documents gathered in preparation for trial. Four media organizations filed court claims for access to those materials, and an attorney said Thursday that the settlement doesn't end the pursuit.

John Borger, who represents The Associated Press, KARE-TV and the Star Tribune of Minneapolis, said the commission shouldn't destroy or return the documents to the Twins and the league until Crump decides their fate.

In New York on Thursday, lawyers for players and owners spent eight hours making their final arguments in the union's case to block contraction. Arbitrator Shyam Das has told the sides he will try to make a decision in the case by July 15.

Players filed a grievance arguing the contraction vote violated their labor contract, which expired Nov. 7 and remains in effect through this World Series.