The African National Congress (ANC) and the National Freedom Party (NFP) will hold coalition talks on Monday afternoon in Durban, the NFP leader said.
"Our delegation is going to have a meeting with the ANC delegation in Durban this afternoon. The ANC has formally approached us to discuss this issue (forming of a coalition)," said NFP leader, Zanele KaMagwaza-Msibi.
The May 18 local government elections resulted in 19 hung municipalities, the situation which forces political parties to form coalitions.
The NFP, which won Edumbe Municipality outright and gained the majority vote in Nongoma, is expected to act as a king maker in a number of hung municipalities.
KaMagwaza-Msibi said her party had not been formally approached by its arch rival, the Inkatha Freedom Party. The NFP was formed mainly by disgruntled IFP members who left the party after a serious fallout caused by a leadership race.
Political commentators argue it is unlikely the NFP will form a pact with IFP. However KaMagwaza-Msibi said her party was prepared to negotiate with any party.
"The IFP has not approached us formally. We have been getting calls from individuals who are members of the IFP requesting us to consider forming a coalition with their party," she said.
Of the 19 hung municipalities, the ANC has a majority in 14 municipalities, the IFP in four and the NFP in Nongama Municipality. If the ANC and NFP form a pact, the IFP will be left with only Ulundi and Umsinga municipalities.
KaMagwaza-Msibi said her party was prepared to work with any party, stressing that no deal had been struck yet with the ANC.
Before the elections, the NFP was accused by the IFP of being an ANC project, the accusation that the party vehemently dismissed.
ANC provincial secretary, Sihle Zikalala, said engagements were taking place between the ANC and other political parties.
"There are parties that have shown interest and the engagements will take place. We are not hostile to any party," he said.
The ANC would form a pact with any party that had a serious interest in serving people. Zikalala said his party would announce the names of its councillors next week. The ANC won the majority of municipalities in KwaZulu-Natal.