Ivica Dacic said the majority of the party's executive backed the deal
The Socialist Party of the late Serbian President Slobodan Milosevic says it has agreed to join the coalition of its pro-European former rivals.
Party leader Ivica Dacic made the announcement after a meeting of his senior officials.
President Boris Tadic's pro-Western bloc won last month's elections but his alliance fell short of the necessary majority.
The move by the Socialist Party follows weeks of wrangling.
State news agency Tanjug quoted Mr Dacic as saying: "The main board supported with a majority of votes the formation of a government with the pro-European alliance."
Details have not yet been released but reports say the Socialists will get the post of parliamentary speaker and two top ministries - police and capital expenditure - despite having won only 12 seats in the 250-seat parliament in May.
It is not clear what will become of the Socialists' earlier agreement to join President Tadic's rivals - the outgoing prime minister Vojislav Kostunica's Democratic Party of Serbia and the ultra-nationalist Radical Party - in power in Belgrade city council.
President Tadic said on Sunday that his three-party coalition and the Socialists had buried past differences and were in talks for a new government which could be formed "very soon".
After May's election victory, Mr Tadic said the Serbian people had in effect given their approval to the country's future membership of the EU, with whom a long-delayed agreement was signed just before the election.
The parliamentary election was viewed as a referendum on whether the former Yugoslav republic should continue on its path towards membership of the EU.
The Radical Party and the Democratic Party of Serbia, who came second and third in the elections, are against EU membership until the bloc stops backing Kosovo's independence.
Over the past month, they have been trying to lure the Socialist Party into joining their coalition by focussing on their common stance on issues such as Kosovo.
But the Socialist Party, which is responsible for the country's international isolation under Milosevic, has reinvented itself as an advocate of social justice and attracts many young, often poor or unemployed voters.