GlaxoSmithKline PLC has agreed to cut the British government's order of H1N1 swine flu vaccine by around a third without penalty.

Under an agreement announced Tuesday, the government's order has been capped at 34.8 million doses.

It won't pay a cancellation fee after both sides agreed that the settlement represented "fair value."

The government says that vaccines that haven't been used will be kept as a strategic reserve in case of another wave of the illness. It also plans to donate 3.8 million doeses to the World Health Organization to boost immunity in Africa before the rainy season.

Glaxo will also provide the government with doses of H5N1 bird flu vaccine and antiviral drug Relenza to replace the amount used during the swine flu outbreak.