[DUBLIN] Irish Prime Minister Enda Kenny's Fine Gael party was on Friday poised to form a minority government after striking a deal with its longtime rival Fianna Fail, following inconclusive elections in February.
"Both Fine Gael and Fianna Fail have reached a political agreement to facilitate a Fine Gael-led minority government," the two parties said in a joint statement.
"Both party leaders are now being briefed, extensive drafting has to be done and then both Fianna Fail and Fine Gael will hold separate parliamentary party meetings to outline the details of the confidence and supply arrangement." The statement came following several hours of negotiations.
The final wording of the confidence and supply agreement has still to be finalised and talks are expected to continue on Saturday and Sunday.
The Irish Independent newspaper reported that Mr Kenny could be re-elected as prime minister or taoiseach on Wednesday.
The outgoing coalition has remained in place in a caretaker capacity since a general election on February 26, in which neither party attracted enough votes to form a government on its own.
Fine Gael won 50 seats and Fianna Fail 44 in the 158-seat Dail, or lower house of parliament. Anti-austerity Sinn Fein won 23 seats.
Together, the two centre-right parties would have more than enough seats to form a stable government but Fianna Fail has ruled out a formal coalition.
Instead, it had offered to support Fine Gael if agreement could be reached on key policy issues.
Although both parties are considered centre-right, their relationship is riven by mistrust and historical enmities dating back to the 1920s Irish civil war.
The issue of water charges had been a key point of contention in the negotiations amid tensions over the wording of legislation agreed to resolve the situation.
Acting transport minister Paschal Donohoe was quoted by the Irish Independent as saying there was agreement across a variety of areas.
"Intense work will now continue in relation to the text of the agreement between both parties. That will then be shared with the Taoiseach and the leader of Fianna Fail and our respective parliamentary parties," he said.
"I'll call it a historic deal when and if it's concluded."
The BBC reported that the deal would last over a period of three budgets and that it would mean Fianna Fail abstaining in key votes, allowing the government to pass important pieces of legislation.
Fianna Fail, whose name means "Warriors of Ireland", was founded by Eamon de Valera, who was later president from 1959 to 1973.
The party has its roots in opposition to the 1921 Anglo-Irish Treaty which granted Ireland limited independence from Britain and provided for the partition of Northern Ireland, which is still part of the United Kingdom.
Fine Gael, meaning "Tribe of the Irish", grew out of the group that supported that treaty.
Under Mr de Valera's leadership, Fianna Fail became Ireland's dominant political force and remained so until 2011, when it suffered an election defeat of historic proportions after a brutal economic crisis and housing crash.