By Agencies

Sebastien Kurz to become world's youngest leader as conservative People's Party enters coalition with right-wing FPO.

Austria is on course to have a far-right party in the government for the first time in 17 years, as anti-immigration sentiment appears to grow across the country and Europe. 

The far-right Freedom Party of Austria (FPO) reached a five-year deal with the larger conservative People's Party (OVP) on Friday - two months after the parliamentary elections. 

"We can inform you, there is a turquoise-blue agreement," said OVP leader Sebastian Kurz in a joint statement on Friday, referring to the colours of the two parties. 

"The voters had made a decision for change," the future Chancellor of Austria added. "This change is now to be ensured together."

The conservatives won the biggest share of the vote in October at more than 30 percent, but failed to achieve a simple majority. 

At 31 years old, OVP's Kurz will now become the world's youngest leader.

The Freedom Party is led by veteran politician Heinz-Christian Strache. 

With the coalition, the FPO will enter the government for the fourth time in Austria.

In the run-up to the October polls, both parties had campaigned for tougher immigration rules and the deportation of asylum seekers. 

The two parties had previously formed a government between 2000 and 2007, leading to European sanctions because of the FPO's far-right views.

Polls were held in October, a year earlier than expected, following a breakdown of the country's grand coalition government in May.

In a neck-to-neck race, the centre-left Social Democratic Party (SPO) obtained 26.9 percent of the votes, just ahead of the far-right FPO on 26.0 percent.

Although the OVP and the SPO have a long history of ruling the country, analysts say one of the reasons the OVP is successful because it has moved away from the SPO and closer towards the far-right.

The election was watched closely across the EU, as the bloc seeks stability in the wake of the UK's Brexit vote last year and a far-right surge in September's German elections.