The coalition has proposed ex-finance minister Mykola Azarov as prime minister, an alliance member said.

Mr Yanukovych had been trying to pull together a loyal coalition after winning presidential polls last month.

He has faced resistance from defeated presidential contender and outgoing Prime Minister Yulia Tymoshenko.

Mrs Tymoshenko was forced out in a vote of no confidence last week.

Speaker Volodymyr Lytvyn said on Thursday that a coalition had been formed on the basis of an agreement signed by the Party of the Regions, the Communist Party, and his Lytvyn bloc.

The coalition includes a total of 235 deputies from the 450-member chamber, he said.

Earlier this week the parliament approved an amendment making it easier for parties to form coalitions by allowing them to recruit individual deputies rather than just parliamentary blocs.

'Empty coffers'

Mr Azarov's nomination has reportedly already been signed off by Mr Yanukovych, and must now be given final approval in a parliamentary vote.

Ukraine has been suffering from political deadlock amid a three-way political contest between Mr Yanukovych, Mrs Tymoshenko, and former President Viktor Yushchenko, impeding efforts to deal with a severe economic crisis.

The International Monetary Fund has suspended part of a $16.4bn (£10.8bn) loan for Ukraine, demanding that the government implement economic reforms.

After the coalition agreement was announced on Thursday, Mr Azarov told parliament that the new government would "eliminate the financial problems created by the previous government".

"The country has been plundered, the coffers are empty, state debt has risen threefold," said Mr Azarov, who is seen as a Yanukovych loyalist.

"The main task today is to redraft and get approved a realistic budget."

Mr Yanukovych is seen as closer to Russia than his predecessor Mr Yushchenko.

Mr Yanukovych's initial victory in 2004 elections was overturned amid the pro-Western street protests that became known as the Orange Revolution and that helped bring Mr Yushchenko to power.

Mr Yushchenko and Mrs Tymoshenko were allies during the Orange Revolution, before becoming engaged in a bitter power struggle.

BBC