Vienna, Jan 5 (IANS): Austrian Chancellor Karl Nehammer said that he would step down in the coming days after coalition talks between his People's Party and the Social Democrats collapsed earlier that day.

He will also resign as the leader of the People's Party.

Nehammer on Saturday said on X that his party has ended the negotiations with the Social Democratic Party to form a new government due to disagreement over key issues, Xinhua news agency reported.

His surprise move came just one day after the NEOS party pulled out of the coalition negotiations to form an unprecedented three-party government. Following the NEOS' withdrawal, the People's Party and the Social Democratic Party confirmed late on Friday to continue their two-party coalition talks.

Negotiations between the three parties had dragged on since mid-November following Austrian President Alexander Van der Bellen's decision in October to task the People's Party with forming a government.

In September's parliamentary election, the far-right Freedom Party came first with around 29 per cent of the vote, followed by the People's Party and the Social Democratic Party with 26.3 per cent and 21.1 per cent respectively. While the Freedom Party won the parliamentary presidency, it has so far been unable to find coalition partners to form a government.

Austrian news agency APA said on Saturday that the path to forming a new government remains unclear. The agency said the business wing of the People's Party might now consider a coalition with the Freedom Party following the resignation of Nehammer, who has repeatedly ruled out the possibility of a coalition with the far-right party under its leader Herbert Kickl.

A snap election is also possible, but analysts say the Freedom Party stands to gain the most if one is called. Recent polls indicated rising public support for the party, positioning it as a potential beneficiary of the political deadlock.