The Labour group on Derby City Council has made a pact with the Tories to secure another year in charge.
It will give three of the 10 positions on the cabinet to the Conservatives, who in return will not side with the Lib Dems in council votes.
The move follows last week's local elections, when both parties lost seats on the city council.
Labour's Chris Williamson will carry on as council leader - but he insisted the arrangement was "not an alliance".
He said: "You might call it an alliance but it quite clearly isn't. What we've reached is an accommodation to ensure Labour majority administration can be formed.
"It is a proposal that enables the city to move forward."
Conservative leader Philip Hickson said the move was a good deal for his party's voters.
"We have got seats on the cabinet, which we didn't have before and an agreement that at least half of our manifesto commitments will be looked at during the course of the year," he said.
"We will also continue to be a vigorous and forceful opposition."
Liberal Democrat Lucy Care, said the electorate had missed out in the pact.
"They have lost a forward-looking manifesto," she said.
"The people that voted Conservative will find that they have got a Labour council, which is going to push forward Labour policies.
"The only people who seem to have benefited from this are the three Conservative members of the cabinet."
In Thursday's elections, Labour did gain one seat from the Tories, but lost the key Darley ward to the Liberal Democrats.
Labour now has 24 seats on the council, the Lib Dems 15, the Conservatives 11 with one independent.