Fiji's opposition Labour Party has accepted posts in the country's new Cabinet, following the re-election of Prime Minister Laisenia Qarase.
Mr Chaudhry declined the offer of joining the Cabinet in 2001
Labour leader Mahendra Chaudhry said he had been offered seven out of 17 seats.
Analysts say that if both major parties are represented in Fiji's Cabinet, there will be less chance of unrest in this racially divided nation.
The poll pitted Mr Qarase's indigenous SDL party against the Labour Party led by Mr Chaudhry, an ethnic Indian.
Race is a central issue in Fiji, where indigenous Fijians make up about 55% of the country's population, while most of the rest are of Indian origin.
It will be the first time in Fiji's history that a major opposition party has joined a government in the Cabinet.
Mr Qarase was sworn in on Thursday for a second term as Fiji's prime minister, following his narrow poll win.
Under the nation's 1997 Constitution, any party winning at least 10% of seats in Fiji's parliament must be offered Cabinet posts in an attempt to ease the country's ethnic tensions.
But after his defeat in the last election in 2001 Mr Chaudhry rejected an invitation to join the Cabinet.
His acceptance this time around is seen as a strong indication that the ethnic-Indians are now prepared to work with their indigenous rivals, says the BBC's correspondent in Sydney, Phil Mercer.
The relationship between both sides, however, is likely to be fractious, our correspondent says.
Mr Qarase has previously made no secret of the fact he would prefer Mr Chaudhry to remain in opposition, as he did after the 2001 election.
"I don't believe in a multi-party Cabinet. I believe that the party that wins should take it all, like in most other democracies," Mr Qarase said on Wednesday.
But Mr Chaudhry was keen to take up the power sharing offer.
"I've given the prime minister a letter of acceptance of his invitation for us to be represented in the Cabinet," he told reporters after the meeting.
"I will be giving him a list of our nominees on Monday," he added, declining to say whether he himself would be one of the candidates or whether he would lead Labour from the opposition benches.