The Rohingya refugee crisis is considered the "world's fastest-growing refugee emergency" after beginning to flee August 25, stated Antonio Guterres, the United Nations Secretary-General.
The agreement was reached on Monday following talks between Bangladeshi Foreign Minister Abul Hassan Mahmood and Myanmarese government official Kyaw Tint Swe in Dhaka.
A 3,000-acre camp at Kutupalong will be able to accommodate the huge influx of refugees, Bangladesh's secretary of disaster management and relief Mohammad Shah Kamal told CNN, including up to 300,000 who had already been living in Bangaldesh before the recent outbreak of violence.
Rights groups say the real death toll is likely to be much higher, especially among the Rohingya, while the United Nations has labelled army operations as "ethnic cleansing" against the Muslim group.
The Rohingya Muslims stated that the Rakhine Buddhists are trying to drive them out, however, the government disputed these claims stating that militants are destroying their own home.
The UN has "substantial capacity" in Myanmar which can be quickly deployed to northern Rakhine once clearance is granted he added.
The stress on Bangladesh has been increasing as the inflow of refugees continues even after nearly more than 40 days after the first instance of violence on 25 August.
The advisory commission led by Annan had recommended that the government hold perpetrators of serious human rights violations against Muslims in Rakhine accountable and ensure the right to freedom of movement for all residents of Rakhine.
Earlier this week, the United Nations warned of the huge pressure to accommodate refugees who have fled to neighbouring Bangladesh, in an appeal for $430 million to provide aid for those displaced.
Myanmar has closed most access to the area, but a couple of agencies have offices open there and the International Committee of the Red Cross is helping the Myanmar Red Cross to deliver aid.
The diplomats were also taken to Anaut Pyin village of Rathedaung township, a community of Rohingya Muslims who have not fled, said local police officer Moe Zaw.
Three groups of diplomats were taken to three different areas on Monday, said Ye Htut, district administrator of Maungdaw in Rakhine.
The UN has labelled Burma's refusal to grant access to Rakhine state - the scene of alleged ethnic cleansing of Rohingya Muslims - as "unnacceptable".