The SDLP has voted by more than two to one to back a new partnership with Fianna Fáil.
The decision was made at a meeting of party delegates in Newry, County Down, this afternoon.
Party leader Colm Eastwood said the proposals would bring the two parties together, to form policies that could be implemented in Government.
Mr Eastwood said: "What we have agreed today is a policy partnership, to try to deal with the very real problems, the crises that are in our politics today.
"It is two parties working together for the betterment of this country, that is what we have committed to, that is what we have agreed, that is what we have a mandate for and that is all we are doing today."
The decision was carried with 70% of delegates voting in favour. 121 delegates voted for the Fianna Fáil partnership - 53 backed an alternative motion that the party would maintain a wider partnership to include Labour and Fine Gael.
The SDLP has badly trailed Sinn Féin in the polls over recent years.
In a statement released after the conference, the SDLP said that: "This partnership will be built on a genuine desire to deliver for people across Ireland, driven by an ambition to see power returned to local politicians and tasked with changing the lives of people who have for too long been let down by our politics here.
"For some members this decision will not have been their desired outcome. The leadership recognise and are sensitive to that fact.
"We will be reaching out to all strands within our party in the coming weeks and months to ensure we move forward together."
A merger to create an all-island party is not currently envisaged but Brexit has prompted republican calls for a referendum on Irish unity after a majority in the North voted to remain in the EU.
The SDLP has no representation at Westminster and 12 members of the 90-strong Stormont Assembly in Belfast.
It has promised a partnership with Fianna Fáil based around shared policies on issues like Brexit and Irish unity.
The Labour Party said it is "disappointed" by the result of the vote.
In a statement released this evening, the party said: "It remains our view that this move represents a precursor to a full merger. We also note that 30% of delegates opposed the leadership motion.
"The consequences of the partnership decision will now be carefully considered by the Labour Party in the coming weeks, and in consultation with our colleagues in the Party of European Socialists.
"The Labour Party remains committed to supporting those who wish to maintain Labour politics and the social democratic tradition in Northern Ireland."