Iceland's radical Pirate Party, calling for a 35-hour working week, direct democracy and total drug decriminalisation, has a strong likelihood of forming the country's next government, according to polls, which the party has dominated since last year.

The anti-establishment party, founded by a group of activists, poets and hackers in 2012, won three of 63 seats in Iceland's parliament, the Alþingi, at the last election in April 2013.

Support for the party has grown to such an extent some analysts are now confident the party could return to the Alþingi with between 18 and 20 MPs giving them a favourable number of seats to help form the next government, Iceland Monitor reports.

In June, the Social Science Research Institute of the University of Iceland found the party was the largest in the country, leading polls at 29.9 per cent, with the centre-right Independence Party, which forms part of Iceland's coalition government with the Progressive Party, at 22.7 per cent.

Their lead has narrowed since, but political scientists are still predicting they could win up to 25 per cent of the vote.

Birgitta Jonsdottir, a former Wikileaks spokeswoman and founding Pirate Party MP, told the Guardian: “It’s gradually dawning on us, what’s happening.

“It’s strange and very exciting. But we are well prepared now. This is about change driven not by fear but by courage and hope. We are popular, not populist.”

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She said the party is prepared to form a coalition government with any partner that will pledge to its agenda of "fundamental system change". The Independence Party has said it will not subscribe to this.

"We will be doing things differently," Ms Jonsdottir added.

Iceland’s general election had been scheduled to take place in April 2017, however following political unrest over PM Sigmundur David Gunnlaugsson’s connections to the Panama Papers it is now due to take place in October, with 29th being the likely date.

Mr Gunnlaugsson temporarily stepped down from his role as Prime Minister in April and has been replaced by Sigmundur Ingi Johannsson, formally the country’s agriculture and fisheries minister.

The Pirate Party were polling at up to 43 per cent in the days following the leak, while Mr Gunnlaugsson's Progressives, the dominant party in the current coalition, slumped to single digits.

Pirate Party leader in Iceland Birgitta Jonsdottir (AFP/ Getty)

Eva Heida Önnudóttir, a political scientist at the University of Iceland said she could “very easily see” the party winning 20 to 25 per cent of the vote.

The radical party told the Reykjavik Grapevine last year, the group wants to see banks completely separate their investment and commercial arms. They have also advocated a new form of direct democracy to “build bridges between the general public and those they trust to serve them”.