Austria's Social Democrats yesterday climbed down over their demand for cancellation of the country's order for costly new jet fighters as the price to install Alfred Gusenbauer, their leader, as chancellor.

The deal will allow Mr Gusenbauer, who has not previously held public office, to be sworn in on Thursday as head of a Social Democrat-led grand coalition government. The move ends months of deadlock after last October's election left neither the ruling People's party (OVP) nor the Social Democrats (SPO) strong enough to form a government on their own or with their preferred allies.