At a joint press conference here, leaders the two parties said SP will contest 298 of the 403 seats and Congress the remaining 105.
"SP and Congress have forged an alliance and will contest UP assembly polls together," SP state president Naresh Uttam told the hurriedly convened media briefing.
UP PCC chief Raj Babbar hoped the SP-Congress alliance will reap a bumper electoral harvest in the state and fulfil aspriations of all sections of the society.
He said a Common Minimum Programme will be drafted within a week.
Sources said the alliance materialised after Congress President Sonia Gandhi intervened.
They said top leaders of both the parties finalised the seat sharing arrangement around wee hours today.
Senior Congress leader Ahmed Patel had earlier tweeted: "Discussion was at highest level- CM (UP), GS I/C & Priyanka Gandhi."
Prospects of forming of an alliance between Samajwadi Party and Congress for the Uttar Pradesh polls had run into rough weather, with both parties hardening their stance over the number of seats.
Chief Minister Akhilesh Yadav had initially offered 100 seats to Congress but they demanded 120.
Samajwadi Party then argued that it had 234 sitting legislators and there were some others who would also contest. Thus, the ruling party needed at least 300 of the 403 seats.
On the other hand, Congress' Central Election Committee
met in Delhi and went ahead with finalising candidates for 140 seats which will go to polls in the first two phases.
"We had a meeting of CEC for the first and second phase," Congress general secretary incharge of Uttar Pradesh Ghulam Nabi Azad had told reporters in Delhi yesterday, adding the party's candidates for 140 seats were finalised.
However, a cofident UP Congress chief Raj Babbar had maintained, "There are no roadblocks in the talks."
Congress was also learnt to have been demanding that its candidates should be fielded in Amethi and Rae Bareli segments of the Lok Sabha constituencies represented by Sonia Gandhi and Rahul Gandhi. It was not immediately known to what extent the SP had accomodated Congress' demand.
SP had maintained it will have no truck with RLD and, if Congress wanted, it could give its share of seats to Ajit Singh's party.
SP vice president Kironmoy Nanda said after the alliance with Congress, "We will get an absolute majority in the state and Akhilesh will become chief minister again."
In the 2012 Assembly polls, SP had won 224 seats with a vote share of 29.3 per cent, while Congress had bagged 28 seats with an 11.7 per cent vote share. A party or alliance which garners 40 per cent of the votes will sweep the polls.
"I have been consistently in talks with Samajwadi Party and Congress' top leadership for stitching an alliance between the two parties in Uttar Pradesh," he said in a tweet.
"Hoping and doing my best to stitch the Bihar-like alliance," Prasad tweeted.
Prasad, who has family ties with Mulayam, had tried in vain to intervene in the battle for party's leadership between the SP patriarch and his Chief Minister son Akhilesh Yadav in the power game in the ruling party.
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