A Plaid Cymru-led Welsh Assembly Government is possible again after Lib Dems voted to revive a coalition plan with other opposition parties.
Mike German is congratulated by colleagues after the vote
A special Liberal Democrat meeting has voted 125-77 to resume talks once more.
It came only days after an opposition "rainbow alliance" seemed to collapse, which led to Labour's Rhodri Morgan being reappointed first minister.
Plaid Cymru welcomed the U-turn and will meet to consider its response, and Lib Dem Mike German was "delighted".
A jubilant Mr German, who leads the Lib Dem assembly group, said he was "very proud" of his party.
Mr German said: "What it has said, quite clearly, is that we want to give the people of Wales that fresh start, that new approach which this all-Wales government could do for it.
"And now I have a programme, I have a mandate from the party to deliver that programme. Now it all falls over to my colleagues in Plaid Cymru to see whether they are prepared to pick up the ball as well."
Plaid leader Ieuan Wyn Jones said: "This means that a range of outcomes are back on the table, including a Plaid-led government".
Plaid is to hold a special meeting of its national council to consider what it should do next.
"Plaid Cymru has today put structures in place to reach a conclusion over the next few weeks," said Mr Jones.
Saturday's conference in Llandrindod Wells had been cancelled, but was back on after 20 requests from grassroots Lib Dems.
Conservative assembly group leader Nick Bourne said the Lib Dem vote was "clearly a much more accurate representation of the views of Liberal Democrat members than that of their split executive earlier this week".
Talks over a so-called "rainbow" coalition had fallen through
Mr Bourne said: "I congratulate them on this result and am sure that opposition parties will want to reflect on it before discussing it further.
"I remain of the belief that a non-Labour alternative in Cardiff is important to bring a sense of direction to government in Wales and a sense of direction to our country."
But a spokesman for Welsh Labour said it would "stick to the promise it made to the people of Wales yesterday when Rhodri Morgan was confirmed as first minister".
A Labour spokesman said: "We will reach across traditional party lines, appeal to progressives within Plaid Cymru and the Liberal Democrats and govern in the interest of the people of Wales."
The latest Lib Dem vote followed three weeks of intense discussion after the 3 May assembly election. Labour won 26 of the 60 seats, with Plaid on 15, Conservatives 12, Lib Dems six, and one independent.
'Keep your promises'
Labour was forced to seek talks with the other parties, but Lib Dems withdrew. Lib Dems then pulled out of discussions with Plaid and the Tories - until the latest twist revived the possibility of a non-Labour assembly government.
However, the latest Lib Dem decision came a day after Mr Morgan returned to Wales's top post on Friday for the third time at a special session in the Senedd in Cardiff Bay.
Just hours before Mr Morgan's nomination, Welsh Lib Dem assembly leader Mike German insisted it was still possible his party would join Plaid and the Tories to form a non-Labour assembly government.
Before Saturday's yes vote, Mr German said he would be campaigning "very strongly" in favour.
"I say to them, if you want to keep your promises to the people of Wales where we said that we would work with other parties to form a stable government, based upon a programme with a Liberal Democrat flavour, then that's what we should be doing (on Saturday)."
He said his party could not say it believed in proportional representation, but then "can't hack PR when it comes to it."
Analysts believe Mr Morgan's strategy in the coming weeks and months will be to seek to undermine links Lib Dem and Plaid politicians have established with the Tories.
Mr Morgan hopes that those Plaid and Lib Dem AMs who fought against an alliance with Conservatives will help his plan.
Speaking on BBC Radio 4 before Saturday's vote, Mr Morgan said he wanted to work with "progressive people there who want to work with Labour and want to stop the Tories from coming back in".
He told the Today programme that Labour would seek "early consultations" with other parties on budget matters.
"Where your (Plaid or Lib Dem) manifesto says the same thing as ours, roughly speaking, well, let's move ahead," he said.
Mr Morgan suggested that affordable housing and the environment were issues Labour could work on with Plaid and Lib Dems, and "keep the Tories out".