By approving the candidacy of Viktor Yanukovich on Thursday, Victor Yuschenko completed the political comeback of the man he defeated in the "orange revolution" of 2004.

Yuschenko announced the nomination in a televised address early on Thursday after hours of talks.

An earlier midnight deadline to nominate Yanukovich or dissolve parliament had already passed.

By opting for a potentially awkward co-habitation Yuschenko is looking to end four months of uncertainty as rival parties have struggled to agree on a coalition government following an inconclusive parliamentary election in March.

Ukraine has been without a fully functional government since March and key decisions have been put on hold.

Future less orange

The president said he decided to nominate Yanukovich after the opposition leader signed up to a declaration of principles safeguarding Ukraine's policies of closer integration with Europe and market reforms.

As president, Yushchenko retains control over foreign policy, defence and national security. But observers say he will struggle to push through his policies and the appointment will be seen as a setback for supporters of the "orange revolution".

Yanukovich, from the Russian-speaking east of Ukraine, wants closer ties with Russia and is less keen on the country's push for NATO and European union membership.

The appointment is bad news
for the 'orange revolution'

However, his advisors have said they will not block Ukraine's preparations for NATO membership.

Yanukovich is seen as an economic pragmatist and has said he will lower taxes for business, including the big industrial exporters that drive Ukraine's economy.

But as some of the country’s powerful business oligarchs are among his biggest supporters there are fears that he will allow a return to cronyism and a lack of transparency in economic policy.

Challenging these problems was seen as one of Yushchenko's few achievements.