The new coalition was agreed on Friday by the conservative People's Party (OeVP) and the FPOe, pledging to stop illegal immigration, cut taxes and resist EU centralisation.
It will be led by Sebastian Kurz, who took over the OeVP in May and yanked it to the right, securing his party first place in October elections. At 31, Kurz will be the world's youngest leader.
At his side for the 1000 GMT investiture in the Hapsburg dynasty's imperial palace in Vienna will be FPOe chief Heinz- Christian Strache, 48.
On Sunday Strache trumpeted to his 750,000 followers on Facebook that the new government will slash benefits for asylum-seekers.
"It will no longer happen for migrants who have never worked here a single day or paid anything into the social system to get thousands of euros in welfare!" he said, gaining 4,000 "likes".
Interior minister will be Herbert Kickl, a former speechwriter for Strache's predecessor Joerg Haider, whose 2000 entry into government prompted an outcry and soul- seacrching in Europe that appears largely absent this time.
The FPOe also secured the defence and foreign ministries, while the OeVP got finance, economy, justice, amongst other portfolios, and will continue to handle EU affairs.
Both Kurz and Strache won over voters two months ago by stoking concerns about immigration following a record influx in 2015, mirroring elections elsewhere in Europe this year.
Geert Wilders' Freedom Party became the second-largest in the Netherlands, Marine Le Pen of France's National Front was in a runoff for the presidency and Alternative for Germany entered the Bundestag.
Speaking at a far-right congress in Prague on Saturday, Wilders said the FPOe's entry into government was "an excellent result". Le Pen called it "very good news for Europe".
"Every election demonstrates a form of rejection of the European Union," Le Pen said, echoing the euroscepticism has also been shown by the FPOe in the past.
Kurz and Strache both stressed on Saturday however that the new government was staunchly pro-EU and that their plans for more Swiss-style "direct democracy" excluded a referendum on EU membership.
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