"Very soon we will have a new government," told AFP, heralding the development as "what we have been waiting for so long".

A document signed by Hun Sen and Norodom Ranariddh outlined the make-up of the new government with the CPP holding 60 percent of seats within the new ruling coalition and FUNCINPEC holding the rest.

The power-sharing deal marks a victory for the CPP after an 11-month battle since inconclusive legislative elections last year, and a climbdown for FUNCINPEC, which had recently demanded a 50-50 spilt of power.

It hands the Cambodian People's Party control of the key finance ministry, but sets out the same power-sharing agreement for the important interior and defense ministries as in the past two governments.

The agreement also marks a blow to the Sam Rainsy Party (SRP), named after its leader and former Cambodian finance minister, which had formed a post-election alliance with FUNCINPEC but was left without a single portfolio under the current deal.

Since national elections last July, Hun Sen's CPP had been stuck in a constitutional dilemma. It emerged the clear winner in the ballot but failed to claim the two-thirds majority needed to govern alone.

As a result, it had been held hostage by two smaller parties, the opposition Sam Rainsy Party and FUNCINPEC, with which it ruled in the outgoing coalition.

The Cambodian People's Party and FUNCINPEC had run Cambodia under a coalition agreement after the two previous elections in 1993 and 1998.

A spokesman for the SRP said the party was still formulating an official response to the sudden announcement, but labelled the breakthrough a positive step.

"Now we see the situation is getting better because very soon Cambodia will have a new government," the party official said, adding "But we are not sure how good or bad it will be."

An Asian diplomat who did not want to be named told AFP that while officials were aware of Friday's late night meeting a breakthrough had not been expected.

"I'm happy to see an agreement reached and to see light at the end of the tunnel," the diplomat said.

Although it is not uncommon for Cambodia to go through a period of political crisis after each election, the latest deadlock was by far the longest, alienating both Cambodia's King Norodom Sihanouk and foreign donors.

The 11-month stalemate had also eroded the king's traditional role as a crisis-broker having failed to personally end the latest deadlock.

The king is in self-imposed exile at his palace in North Korea and had said that he would not return until the CPP and FUNCINPEC party finalised a deal to jointly govern.

Under the terms of Friday's agreement, the national assembly will sit under the chairmanship of Norodom Ranariddh, who will overseee the examination of two crucial pieces of mothballed legislation.

One concerns a future tribunal for former leaders of the genocidal Khmer Rouge movement, and another deals with Cambodia's accession to the World Trade Organisation.

Sources and Relevant Links:

AFP: Cambodia to get national government after 11 month deadlock 26 June 2004