Birmingham's Muslim-led People's Justice Party is to disband, with its 400 members transferring to the Liberal Democrats.
The shock announcement last night follows eight months of secret negotiations between the two parties.
It means that the two PJP city councillors, Shaukat Ali Khan in Aston and Mohammed Saeed in Bordesley Green, become Liberal Democrat councillors with immediate effect. Both have already joined the party.
All PJP candidates selected for the May council elections w ill stand as Liberal Democrats.
The move increases the size of the council Liberal Democrat group to 32 and further safeguards the future of the Tory-Lib Dem coalition running Birmingham - which now has a 24-seat majority over all other parties.
PJP group leader Coun Shaukat Ali Khan said talks about disbanding the party began when members worked closely with the Liberal Democrats to expose postal vote fraud in Aston and Bordesley Green.
Coun Ali Khan added: "We have decided it is time to join mainstream politics.
"The Liberal Democrat Party provides the most obvious home for our membership. People are very excited about this because they can see that we will now be able to play a bigger role in helping to run Birmingham.
"Labour did a lot of damage when they were in control of Birmingham for 20 years and we believe it is the Conservative-Liberal Democrat coalition that will take this city forward."
The PJP, originally the Justice Party, was formed in the 1990s by disgruntled Asian Labour councillors who felt that the council was not doing enough to help the inner city Muslim community.
Last night's events were described as "historic" by Paul Tilsley, the leader of the council Liberal Democrat group and deputy leader of the City Council.
Coun Tilsley (Lib Dem Sheldon) added: "We are proud to welcome the People's Justice Party into the Liberal Democrat fold. "Talks have been going on between the two parties for some time."