The firm must make it easier for users to find out how their data is collected and what it is used for and submit to a two-year review.
The deal follows an investigation by the regulator. Similar reviews are continuing elsewhere in Europe.
It is understood that Google will seek to strike a similar deal with other European regulators.
The Information Commissioner’s Office (ICO) found that Google was “too vague when describing how it uses personal data gathered from its web services and products”.
It will also provide “unambiguous and comprehensive information regarding data processing, including an exhaustive list of the types of data processed by Google and the purposes for which data is processed”.
Google has until 30 June 2015 to implement the changes and it is believed it will roll out a single policy across the European Union in order to satisfy each of the regulators that opened investigations.
It has also dropped appeals related to investigations being undertaken by the French and Spanish watchdogs.