Two center-right Dutch political parties have reached agreement for a minority government with support from the anti-Islam PVV Freedom party, ending months of political limbo.

The announcement, paving the way for the country's first postwar coalition government, was made by the leader of the VVD Liberal Party, Mark Rutte, after late-night talks with the Christian Democrats (CDA).

"We have just put the finishing touches on the agreements that will give form to our political cooperation," VVD leader Mark Rutte said on Dutch public broadcaster NOS.

"I'm so happy that we have come so far."

VVD leader Mark Rutte is likely to become the Netherlands' next prime minister.

News reports quoting unnamed sources and the state information office said a formal coalition agreement would be signed on Wednesday and presented to Queen Beatrix's official representative on Thursday.

Elections four months ago gave seats to 10 different parties and failed to produce a majority on either side of the political spectrum.

The VVD won the most seats, 31 out of 150, largely on a platform of cutting the budget to shore up economic confidence, while the PVV won 24 seats and the CDA won 21. The coalition would be the country's first minority government since 1939.

The deal would reportedly allow only the VVD and Christian Democrats into the cabinet with the parliamentary support of the PVV, which advocates banning the Koran and a halting on all Muslim immigration to the Netherlands.

Party member objections

Prominent members of the VVD and Christian Democrats have spoken against cooperating with the Freedom Party, whose leader, Geert Wilders, is on trial for inciting hatred and discrimination against Muslims. His trial is to resume on Oct. 4.

Any coalition deal would have to be approved by the party congress of the Christian Democrats scheduled for Saturday.

Last week the country's caretaker government, led by outgoing Prime Minister Jan Peter Balkenende of the CDA, proposed cuts of 3.2 billion euros ($4.3 billion) for its 2011 budget. The new government is expected to approve plan further cuts of 18 billion euros over the next four years.

Balkenende has remained in office on an interim basis since his government collapsed in February, when the Social Democrats left the coalition over the country's military role in the NATO mission in Afghanistan.

Author: Nigel Tandy, Andrew Bowen (dpa/Reuters)
Editor: Chuck Penfold