Japan's Liberal Democratic Party ( LDP) and its key ally, the New Komeito Party, formally agreed on Tuesday to form a coalition government, Japan's Kyodo News Agency reported.

Incoming Prime Minister Shinzo Abe, leader of the Liberal Democratic Party (third from right), and New Komeito leader Natsuo Yamaguchi seal their deal (Photo: Japantimes)

The two signed a coordination document to push forward a supplementary budget bill for the 2012 fiscal year and promote discussion of a constitutional amendment and energy policy. Shinzo Abe is scheduled to become the country's new prime minister at a special session of the Diet today and will immediately form his cabinet.