Iceland has a new government after the centre-right Independence, Reform and Bright Future parties agreed to form a coalition, which could pave the way for the country to join the European Union.
As part of the new settlement Iceland's parliament will be given a vote on whether to hold a referendum on joining the 28-member bloc.
The coalition will hold 32 of the 63 seats in parliament - just enough to give it a majority.
The Independence Party - which opposes EU membership - will have 21 seats, making it the largest party in the coalition.
The other two parties favour joining the EU.
The deal brings to an end three months of stalemate since October's general election.
The three parties failed in their attempt to form a coalition in November and the Left Greens and the Pirate Party also made unsuccessful attempts to form a government.
Iceland applied to join the EU in 2009 after parliament voted to enter talks.
But officials walked away from the negotiations in 2013 after an election saw Eurosceptic parties take power.
