The Conservatives and the Liberal Democrats have entered into Britain's first full coalition government since 1945.
David Cameron is the country's new prime minister, while Nick Clegg will serve as his deputy.
Four other Liberal Democrat MPs will take cabinet posts, including Vince Cable as chief secretary to the Treasury. From the Conservatives, George Osborne will be Chancellor of the Exchequer and William Hague will be foreign secretary.
This historic deal is the first time that the Conservatives and Lib Dems have had a power-sharing deal at Westminster.
Speaking last night, Cameron said: "This is going to be hard and difficult work. A coalition will throw up all sorts of challenges. But I believe that together we can provide that strong and stable government that our country needs."
Clegg urged doubting Lib Dem voters to "keep faith with us".
The agreement follows five days of talks between the two parties on forming a new government. The Lib Dems also held ultimately fruitless talks with Labour on a possible "progressive alliance".
Gordon Brown resigned last night, marking the end of 13 years of Labour rule.