Just two months after state elections, the two parties signed the agreement on Monday to form a ruling coaltion which leaves Berlin's state government with only a small majority of 76-73.

On Sunday, a clear majority of Left Party members voted for the coalition (111 votes from 133).

The Socialist Democrats (SPD) passed the motion the day before with only one of the around 200 delegates voting against it.

The current mayor of Berlin, Klaus Wowereit, who is to be reelected for a second term by the city's legislature on Thursday, said the SPD had found a reliable partner in the Left Party.

Wowereit said the coalition would serve as a nationwide example that "socially equitable politics wasn't an obsolete model."

Left leader warns against coalition

But Left Party leader Oskar Lafontaine warned that the coalition in Berlin was a "false step" that endangers the left.

On Sunday in Berlin, Lafontaine outlined his vision of a left party -- it should be the "port of call for the excluded." Lafontaine said these people, of whom he said there are some 10 million, were susceptible to right-wing extremists if the left "didn't manage to become their contact person."

Lafontaine also criticized the current coalition in Berlin for their "rash decision" to liberalize store opening hours before all other German states. Berlin's state legislature ruled last week that stores will be able to stay open 24 hours from Monday through to Saturday.