The Liberals and NDP have reached a deal to bring down the federal Conservative government and form an unprecedented coalition to take its place that would last 30 months and include cabinet seats for both parties.
Sources confirmed Sunday night that the two sides have ironed out an agreement that would see a cabinet of 24 members — 18 Liberals and six NDP.
The two parties called emergency caucus meetings Monday to lay out the plan under which the Tories would lose power to Canada's first coalition government in 91 years.
The Harper government, meanwhile, scrambled over the weekend to save itself from a historic parliamentary defeat, backtracking on two contentious measures even as the opposition moved forward with plans to forge a coalition government.
Such a coalition would put the Canadian government into uncharted waters. The only true coalition cabinet to have ruled Canada was Conservative prime minister Robert Borden's Union government during the First World War, which included Liberal members.
The key question of who would lead the first coalition government of modern times remained unsettled Sunday night, as Liberals differed over whether Stéphane Dion should take over as interim prime minister, or a new leader be chosen — and leadership contenders Michael Ignatieff, Bob Rae and Dominic LeBlanc met to discuss how to proceed.
That meeting took place against the backdrop of frantic efforts to avert the downfall of the Conservatives, who announced they will withdraw measures that would have banned civil-service strikes for three years and eliminated the $1.95-a-vote subsidy for political parties, which the opposition relies on.
The Tories also unveiled a surreptitiously recorded tape of a New Democratic Party caucus meeting, alleging it showed a long-existing cabal with the Bloc Québécois to defeat the government — and there were rumours that as a last resort, Mr. Harper might seek to prorogue Parliament, ending the session to avoid defeat in the Commons.
On Sunday, Finance Minister Jim Flaherty, who did not unveil an economic stimulus plan in his economic update Thursday, announced he will deliver a "comprehensive" budget earlier than usual, on Jan. 27, and that it will contain measures to stimulate the economy, probably including one-time spending to help ailing industrial sectors.
"There will be further stimulus to the Canadian economy. [It's] inevitable given the continuing challenges that we're facing in the Canadian economy," he told reporters.
"Too little, too late," NDP deputy leader Thomas Mulcair replied later. "We saw the real face of the Conservatives this week: doctrinaire, ideological, trying to please their Reform base. That's the game."
Liberal finance critic Scott Brison said the promise of economic stimulus will not change coalition plans. "Mr. Flaherty is still only providing words, but no plan for the Canadian economy," he said.
Meanwhile, teams of opposition negotiators were holding three sets of talks involving the Liberals, NDP and Bloc on a deal that would see a Liberal-led coalition government that would include NDP ministers.
The Liberal-NDP coalition would be supported by the Bloc on confidence votes in the Commons through an accord that would guarantee its survival for at least a year, Liberal and NDP sources said.
Liberal sources said the party is planning to unveil a team of high-profile economic advisers, possibly including such figures as former deputy prime minister John Manley and former New Brunswick premier Frank McKenna, to provide a Barack Obama-style heavyweight team to offer advice on the economic crisis.
Mr. Mulcair said the coalition talks are well advanced, and include discussion on both the government's structure — how key posts will be divided — and on the main elements of its political program. He said the talks have gone extremely well with both parties and are "arriving at their final culmination point."
