Determinism is the concept that the universe always follow the rule of causality. However, it does not state anything regarding free will. Whether determinism leads to free will is a different argument.
The Hard Determinist believes that determinism is true, and that free will is incompatible with determinism.
The Libertarian believes that determinism is false because free will is self-evidently true.
The Compatibilist (or Soft Determinist) believes that free will and determinism are compatible, that is they are both true. Thus, it does not matter to the concept of free will whether determinism is true or not.
Compatibilism argues that the Hard Determinist and the Libertarian (together classified as the incompatibilists), do not correctly nor clearly define the concept of free will.
The first step is to answer what free will is. From examining our common useage of the word, an action done out of free will is an action that is done out of the agent's desires in the absence of compulsion, coercion or constraint. If this is a sufficient definition of free will, which I think probably is, then free will and determinism are compatible.
Further info:
Link:
http://plato.stanford.edu/entries/compatibilism/#1.1
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