Israeli prime minister Benjamin Netanyahu has reached a deal with a major political party to form the next government, the party said.
The three main coalition partners will meet later to sign the agreement, according to a spokeswoman for the Yesh Atid party.
After weeks of negotiations, Mr Netanyahu's bloc has joined up with the centrist Yesh Atid and the pro-settler Jewish Home parties. Former foreign minister Tzipi Livni, who leads a small party, joined last month. The talks had stalled over the division of cabinet portfolios and planned reforms in the country's military draft law.
The new cabinet appears set to address pressing domestic issues while putting peacemaking with the Palestinians on the back burner.
Although Mr Netanyahu's Likud-Yisrael Beitenu bloc emerged as the biggest faction in the January 22 parliamentary election with 31 seats, he has struggled to form a coalition with the necessary 61-seat majority of 120 seats in parliament.
The prime minister's bloc has now joined up with two parties led by charismatic newcomers who made big gains in the election.
Yesh Atid, founded by former TV personality Yair Lapid, won 19 seats in the election on a message promising relief to Israel's struggling middle class and an end to draft exemptions for the ultra-Orthodox. As head of the second largest party in parliament, Mr Lapid will serve as the new finance minister, a position with great influence over setting the government's budget. It will also control the education ministry.
The Jewish Home, a party linked to the West Bank settler movement led by hi-tech millionaire Naftali Bennett, is likely to control the housing and trade ministries. Mr Netanyahu's bloc will retain control of the powerful defence and interior ministries.
Ms Livni, who leads a small dovish party committed to reaching peace with the Palestinians, joined Mr Netanyahu's coalition last month with promises that she would be his chief peace negotiator with the Palestinians.
If all goes according to plan the new Israeli government will be sworn in by Monday, two days before US president Barack Obama visits Israel.