SARAJEVO: Bosnia's main Muslim, Croat and Serb parties agreed to form a central government Wednesday, ending a 14-month political crisis that paralyzed the state and blocked further EU integration.

"We have reached an agreement on the composition of the government", Sulejman Tihic, the leader of the SDA Muslim party, told a press conference.

He added that the political leaders also agreed on two pieces of legislation on holding a census and distribution of state aid, which Brussels insists on if Bosnia is to take further steps to joining the European Union.

"None of us are totally happy but it is a good agreement made in the interest of Bosnia, its communities and its citizens," Tihic said.

Hardline Bosnian Serb leader Milorad Dodik praised Wednesday's agreement as a victory for "compromise and understanding" after months of squabbling over the distribution of government posts.

"After the implementation of the two laws (on the census and state aid) and the formation of the government, Bosnia can apply for candidate status for the European Union," he said.

Initially Bosnia planned to apply for candidate status this month but is now expected to do so after the new government is inaugurated early January.

"Better days are ahead because we reached an agreement on the principles that will allow Bosnia to develop," Bosnian Croat political leader Bozo Ljubic said.

Since the 1992-95 inter-ethnic war that left almost 100,000 people dead, Bosnia has been divided into the Bosnian Serb-controlled Republika Srpska and the Muslim-Croat Federation overseen by a weak central government.

The still deeply divided country had been in crisis since elections in October 2010, with the rival Serb, Muslim and Croat leaders unable to form a central government.

The rivalry between the communities also harmed the Balkan country's aim to join the European Union and NATO.

The international community and the EU had been pushing for an agreement. Both Brussels and Washington support strengthening the central government's powers in order to implement political, judicial and economic reforms.

After almost four hours of negotiations Wednesday the main parties in the central parliament representing the three communities agreed that the post of the prime minister would be filled by a Bosnian Croat.

The main Croat party must submit the name of its candidate on Thursday to the presidency.

After being officially named PM designate, the candidate will still have to be approved by the central parliament, but the parties which concluded the deal have the majority there.

The remaining nine ministries in the government will be divided among the political parties of the three communities.