VIENNA (Reuters) - Austrian conservative leader Sebastian Kurz will hold coalition talks with the far-right Freedom Party (FPO), both sides said on Tuesday, bringing the anti-immigration party a step closer to power, which it last held more than a decade ago.

Head of the People's Party (OeVP) Sebasian Kurz addresses a news conference in Vienna, Austria, October 24, 2017. REUTERS/Leonhard Foeger

Having won last week’s parliamentary election with 31.5 percent of the vote, Kurz’s party is far short of a majority, needing a partner to gain control of parliament and form a stable government. Only two parties have enough seats to do that with -- the Social Democrats (SPO) and the FPO.

Kurz, 31, took a hard line on immigration in the campaign that left little space between him and the FPO, and both parties capitalized on a widespread feeling that the country had been overrun during Europe’s migration crisis in 2015 and 2016.

He called for an end to the current coalition with the SPO when he took over as leader of the People’s Party (OVP) in May, arguing in favor of a break with Austria’s tradition of often deadlocked centrist coalitions. That left the FPO, a party founded by former Nazis in the 1950s, a more willing partner.

“I have therefore decided to invite (FPO leader) Heinz-Christian Strache and the FPO today to take part in coalition talks,” Kurz told a news conference.

Strache soon accepted, saying teams from both parties would meet on Wednesday but adding that the FPO would not strike a deal at any cost.

“Being part of the government is not an end in itself and only makes sense if we can implement our correct and important policies,” Strache told a news conference. “Therefore no one should think that we will make it easy for the OVP.”

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“LESS BUT BETTER”

Some European leaders have expressed concern about the possible return to power of the FPO, which first became a major force in the 1990s under the late Joerg Haider, who praised Hitler’s employment policies.

The party has steadily increased its mainstream appeal in recent years. It says it has turned its back on its Nazi past, though it still frequently has to expel members for anti-Semitic statements. It has also dropped calls for Austria to leave the European Union as most Austrians back membership.

Kurz has sought to allay such concerns and repeated on Tuesday that any government must have a “clear pro-European orientation”, though he also wants a streamlined EU that focuses on core tasks like trade and protecting external borders.

Strache said he backed that view of Europe, the fourth of five scenarios for the future of the bloc laid out by European Commission President Jean-Claude Juncker in March, which Strache called “less but better”.

Strache and Kurz on Tuesday both emphasized the importance of cutting taxes. Both believe in restricting benefits for foreigners and making the state more efficient, but the FPO also wants to increase some benefits like the minimum state pension.

“In terms of content there are some things that unite us and others that divide us,” Kurz said in a typically vague answer on his expectations of a deal. He hopes to have an agreement by Christmas.

The FPO has made control of the Interior Ministry a condition for any deal, but it did not mention that on Tuesday.

The OVP and FPO went into government together in 2000, which prompted the rest of the EU to impose short-lived sanctions on Austria over the FPO’s accession to power.

Given the more guarded response to Austria’s election in the aftermath of the migration crisis and the rise of other right-wing parties like France’s National Front and the Alliance for Germany, a new tie-up between them is unlikely to provoke the same outrage.