The decision means Network Rail will strive to achieve efficiency savings of 21% in the coming five year period - a figure the rail operator had previously said was unrealistic and had proposed a figure of 13%.
In addition, Network Rail has dropped the notion of raising £6bn of independent debt because of: "The nature of the final determination and its challenges, coupled with current market conditions," according to a statement. This debt will be underwritted by the government.
ORR chief executive Bill Emery said: "I know that Network Rail has looked very carefully at our determination and I am pleased it has accepted it.
"Network Rail can now work with industry partners to deliver, over the next five years, the required improvements to safety and reliability and continue to expand network capacity for the long-term benefit of passengers and freight customers.
"Network Rail will be making these improvements with less funding than it has received in the current five-year period and the company recognises that it will need to implement new technologies and find better ways of working.
"We are confident the company, building on its good performance in the current five-year period, will successfully rise to the challenge laid down by our determination.
"We will continue to actively monitor Network Rail, to check that it delivers the improvements required by our determination and that its actions to live within its means are not at the expense of long-term sustainability of the railway infrastructure."
From 1st April 2009 to 31st March 2014, Network Rail will invest some £7.6bn on projects designed to relieve crowding by lengthening platforms and increasing capacity to enable more trains to run.
£10.8bn will be invested in renewals - replacing older parts of the network such as rail, signalling and bridges with new infrastructure.
A further £10bn will be spent on day-to-day maintenance and running costs.
Network Rail's chief executive Iain Coucher said: "The next five years will see unprecedented investment in expanding the network and improving services for passenger and freight users. The task the ORR has set us is a tough one with ambitious savings to be made and further service improvements to deliver, but we are determined to succeed."
The agreement brings to a close the round of horse-trading that began with the government's High Level Output Specification - what the government wants from the rail network - in the summer of 2007.
Network Rail and the ORR did not agree on how much money the track operator needed to achieve the outputs set out in HLOS. Network Rail's acceptance of the regulator's determinations closes this chapter.