The Belgian caretaker Prime Minister, Guy Verhofstadt, has agreed to form an interim government.
Guy Verhofstadt lost elections in June
King Albert II asked him to put an end to the political paralysis that has left Belgium without an effective government since elections in June.
Yves Leterme, whose Flemish Christian Democrats won the poll, had earlier failed to form a coalition.
Last week, the European Commission warned that the political crisis was beginning to affect Belgium's economy.
The palace said in a statement that "the king has charged Verhofstadt with forming an interim government, which will take care of urgent matters and start negotiations leading to institutional reform".
Mr Verhofstadt, whose Flemish Liberals were beaten in the June elections, will now have to seek a compromise with French-speaking politicians in Wallonia.
The crisis has prompted speculation of a possible end to Belgium's 177-year existence.
On Saturday, thousands of trade unionists took to the streets in Brussels, complaining about the political stalemate and rising food and fuel prices.