Italy's opposition Democratic Party (PD) has said it is ready to form a coalition with the Five-Star Movement, setting aside years of hostility to avoid a snap election and ease economic uncertainty.
Following days of often tense and difficult talks, PD leader Nicola Zingaretti told Italy's president that his party would accept the Five-Star candidate for prime minister - the current premier Giuseppe Conte.
"We love Italy and we consider it worthwhile to try this experience," Mr Zingaretti told reporters.
"In difficult times like these, shunning our responsibility to have the courage to try this is something we cannot afford to do."
President Sergio Mattarella is to meet Mr Conte tomorrow morning, at which point he is expected to give him a mandate to form a government - Italy's 67th since the end of World War Two.
Once Mr Conte is sure he has a working majority, the new government will face a confidence vote in parliament.
The previous coalition made up of Five-Star and the far-right League collapsed this month when League leader Matteo Salvini withdrew hoping to trigger an early election and take advantage of his increasing popularity.
But his move backfired when Mr Conte refused to resign immediately, giving Five-Star and the PD time to try to overcome their fierce mutual animosity and agree to a government that had initially appeared impossible.
The prospect of a new administration led by Mr Conte, who is considered close to the Five-Star, has buoyed markets, which are betting that Italy will get a fiscally prudent government that will avoid confrontation with Europe.
The League is highly eurosceptic and had promised swingeing tax cuts for 2020 that economists warned could put unsustainable pressure on Italy's towering debt mountain.