Parliament aims to pass the bill by the end of next week, the speaker of the national assembly said in an announcement on Tuesday.

The opposition also voted to allow Finance Minister Goodall Gondwe to spend K90.2 billion (US$657 million) over four months until the budget is implemented.

"I am happy now that we can move on smoothly and pass the budget for the sake of our people in this country," Gondwe told Reuters. The 2008/09 budget proposes increasing public service salaries by 20 percent, doubling spending on a fertilizer and seed subsidy programme that has fuelled growth in recent years and introducing tax measures to encourage local cigarette manufacturing.

The budget is also crucial for funding elections next year.

President Bingu wa Mutharika suspended parliament in June until opposition leaders promised to adopt the budget.

The opposition had refused to approve the bill, saying wa Mutharika's Democratic Progressive Party should first lose more than 60 legislators whom they accuse him of poaching when he quit the UDF.

As part of the deal to approve the budget, opposition and the government said they agreed the speaker could at a later date sack MPs who had switched parties, a move that would likely weaken wa Mutharika ahead of next year's elections.

Wa Mutharika, lauded for economic achievements in the last three years, has clashed with the opposition since he quit the UDF, which sponsored his candidature in 2004 elections.