The two pro-European parties that dominated last month's Dutch election said on Sunday that they have agreed to form a coalition.
"The head of Liberal VVD Mark Rutte and the head of the Labour PvdA Diederik Samsom have ... finalised discussions for a Liberal-Labour coalition," according to a statement issued by negotiators.
The deal, whose contents were not officially divulged, would be put on Monday morning to the two parties' parliamentary groups.
Local media had reported Friday that the coalition will launch an austerity drive to save 15 billion euros ($19 billion) by 2017.
Liberal Prime Minister Rutte is expected to stay on in the job, while the foreign minister's job currently held by Liberal Uri Rosenthal is expected to go to Labour, Dutch political commentators have said.
During the September 12 elections, the Liberals obtained 41 seats while Labour took 38 out of a possible 150 up for grabs.
Het Financieele Dagblad had reported that the new government's budget would make savings of 15 billion euros thanks to reforms in health insurance, real estate and a reduction in development aid.
Popular daily De Telgraaf quoted a savings figure of 16 billion euros and said that the job of deputy prime minister would not go to Samsom but to another member of the Labour party.
The two parties said earlier this month that minor changes to the 2013 budget would not affect the government's plans to see the deficit drop to 2.7 percent of gross domestic product for next year, from 4.7 percent in 2011.
The Netherlands came under fire from its European partners after the deficit tipped 4.7 last year, above a three percent ceiling imposed by the European Union.
Talks on budget cuts led to the collapse of Rutte's government in April when his far-right parliamentary ally walked out of talks.