A new government was scheduled to take office in crisis-hit Iceland yesterday, after the prime minister resigned last week in the face of mounting protests over the country's dire economic situation.

Prime minister-in-waiting, Johanna Sigurdardottir, who is an openly gay politician, was scheduled to visit Iceland's president in the afternoon before taking office as head of a new coalition government.

It is expected Sigurdardottir's Social Democrats will govern alongside the Left-Green movement until elections in the spring.

Negotiations between the coalition parties and the centrist Progressives, whose support they will need in Parliament, have dragged on for days.

Sigurdardottir, 66, is Iceland's former social affairs minister and will be the country's first openly gay leader.