Austria's Conservatives led by Sebastian Kurz on Wednesday agreed to form a coalition government with the Greens after a final round of talks capping almost three months of negotiations.
Kurz's People's Party (OeVP) and the Greens made gains in the election, bringing them together in unlikely negotiations given the 33-year-old's carefully groomed image as a hardliner on immigration.
"The OeVP and Greens have agreed on a government programme together," a Greens representative with knowledge of the negotiations, who declined to be named, told AFP.
An OeVP official confirmed the same to AFP. The two parties' leaders are to make a statement later Wednesday.
Despite progress to bridge the significant gaps, observers said the new government would face challenges after Kurz's previous rule with the far-right Freedom Party (FPOe) saw a raft of anti-immigration measures passed, sharply dividing Austrians.
"2020 as a political year of change" ran the main online headline of the Kurier daily earlier Wednesday.
Both the OeVP and the Greens will be hard-pressed to show they have not compromised too much on their key principals and campaign promises when they present the joint government programme, which is expected Thursday.
"From his (Kurz's) perspective, it's a huge stretch and it's also a danger that over time he might lose some of the voters he gained from the Freedom Party," analyst Thomas Hofer told AFP.
In the September polls, the OeVP managed to pick up disenchanted FPOe voters, getting 37.5 percent in total.
The Greens secured 13.9 percent of the vote, their best-ever result, due to the environment replacing immigration as top concern in the country of 8.8 million people.
Hofer said other European countries, such as Germany, could also see Conservative-Green party coalitions in the future. Sweden, Finland, Lithuania and Luxemburg already have Greens in government.
"Kurz is setting a certain trend maybe ahead of time, and this is certainly something also on the international stage that he would be able to sell," he said.
Hofer described Greens chief Werner Kogler, who is expected to be vice-chancellor, as a "pragmatist" who had stabilised the party.
The 58-year-old took on the leadership after the party lost all their parliamentary seats in a shock defeat in 2017, largely due to infighting and splits.
A congress of the party's almost 280 delegates must still endorse the coalition agreement, but they are expected to do so.
"It's a historical chance for them," Hofer said.
As junior coalition partner, the Greens would get four ministries, including an enlarged environment ministry that also comprises infrastructure, traffic, energy and technology, according to a party representative familiar with the negotiations.
The OeVP will maintain control of the rest, including the coveted interior ministry -- previously headed by a far-right official and embroiled in scandal -- and the finance portfolio.
Greens official Ewa Ernst-Dziedzic told the Standard daily in an interview that compromises are "part of democracy", and that the coalition partners would address challenges rather than "feign harmony and sweep difficult topics under the carpet".
The far-right FPOe -- previously riding a wave of populist sentiment seen across Europe -- was routed in the polls after the so-called "Ibiza-gate" graft scandal brought down their then-leader and vice-chancellor in May and caused the government to collapse.