Guy Verhofstadt, the outgoing Belgian prime minister, has accepted a request from King Albert to form a caretaker government more than six months after elections in which his party was the main loser.
It is hoped that an interim government will able to deal with the country's urgent economic issues and prevent a political crisis.
Two leading parties from the northern Flanders and two from the southern Wallonia failed to form a coalition government despite months of talks after general elections on June 10.
"The king has charged Verhofstadt with forming an interim government, which will take care of urgent matters and start negotiations leading to institutional reform," a royal statement said on Monday.
Provided it passes a parliamentary vote of confidence, such a government would last no longer than March 23.
It would probably draft a budget for next year as well as make certain decisions on pressing judicial and police matters
Verhofstadt has already held talks with the Liberals and Christian Democrats on the Dutch-speaking side and Socialists and Liberals in the southern Francophone region in an attempt to build a government.
'Problem country'
"We are slowly turning into a problem country. Our international reputation is suffering from this," Bart Somers, leader of Verhofstadt's Liberals, said.
You hear people complain about the loss of purchasing power. You need a government to fix that."
Rising food and fuel prices and the failure to form a government have caused public anger, including a labour union members march last Saturday.
However, Verhofstadt has seen his public rating increase during the political standoff.
An opinion poll in the daily La Libre Belgique on Monday found that Verhofstadt had the most support in Wallonia, Flanders and bilingual Brussels.
But it is unclear whether Verhofstadt would be prepared to lead a new coalition government.
Autonomy demands
Belgium has failed to reach a deal on a new coalition as Flemish parties want greater autonomy for its regional government and more control of labour market policy.
Wallonian parties feel that their region would loose out in such a move. Wallonia is economically far weaker than Flanders - with more than double its unemployment and a reliance on its northern neighbour's tax revenues.
The deadlock has led to fears that the country could split into two separate nations. However, majority public feeling appears to be against division.
The poll in La Libre Belgique on Monday also found the vast majority of Belgians wanted the country to stay together.
Source: aljazeera
