The surprise runaway winner of Thailand's election, the Pheu Thai party, says it has agreed to form a coalition with four smaller parties.The party - led by by Yingluck Shinawatra, sister of ousted PM Thaksin Shinawatra - won a clear majority with an estimated 265 seats.
Prime Minister Abhisit Vejjajiva has announced his resignation as leader of the Democrats, which won 160 seats.
The outgoing defence minister said the powerful army would accept the result.
Ms Yingluck, who has no previous political experience, said Pheu Thai and four other parties had "agreed to work together to run the country and solve people's problems".
"The first urgent issue is how to achieve reconciliation," she said.
Mr Thaksin was ousted by a military coup in 2006, and critics of his sister say she is a proxy for him.
But speaking from Dubai, where he lives in self-imposed exile to avoid a jail sentence for corruption, Mr Thaksin has said he does not want to return to Thai politics.
"I've been with the party too long, and I really want to retire," he said.
Mr Thaksin said he was proud of his sister and that he would give Pheu Thai "whatever advice they may need", but that the Thai people were "in good hands".
'Victory of the people' He said Ms Yingluck's lack of experience could be an advantage, saying a "clean slate" was useful at times in politics.
With nearly all votes counted, Ms Yingluck's Pheu Thai has a clear majority with 265 seats and Prime Minister Abhisit Vejjajiva's Democrats 159.
The coalition will together have an estimated 299 seats, effectively controlling about 60% of parliament.
The election results pave the way for Ms Yingluck, a 44-year-old business executive, to become Thailand's first female prime minister and the fifth person to hold the post since her brother.
As the results emerged on Sunday night, she said the result was "a victory of the people" and that the party was "ready to deliver on all of the policies that we have announced".
The BBC's Karishma Vaswani in Bangkok says the coalition is being seen as a clever move in Thailand, as it will make it easier for Ms Yingluck to push through reforms promised during her election campaign and create a sense of stability.
However, there are fears of further turbulence ahead for Thailand, our correspondent says, and concerns of how the influential military might react.
The outgoing Defence Minister Gen Prawit Wongsuwan said he had spoken to army leaders who said they would accept the result and had "never entertained any idea of doing anything that will damage the country".
The army chief has dismissed speculation of a military coup but, says our correspondent, Thailand's generals have made such promises before, and much depends on whether Mr Thaksin does decide to stay away.