The ruling and main opposition parties reached an agreement on the government budget for next year Friday, ending the opposition New Politics Alliance for Democracy's (NPAD) boycott of parliament.
The agreement raises hopes that the National Assembly will pass the budget bill by the Dec. 2 legal deadline for the first time in 12 years.
The floor leaders of the ruling Saenuri Party and the NPAD managed to narrow their differences over the bill and announced the accord in the afternoon.
For the past weeks, the two parties had been wrangling over issues including funding for a free childcare program that was an election pledge of President Park Geun-hye.
On Wednesday, the opposition declared the boycott as the parties failed to agree on who should shoulder the costs of the childcare program.
In Friday's deal, the central government will cover the cost of expanding the program, which is designed to offer subsidies for care of children between three and five years old. Previously, the Saenuri Party had called on the central government to cover only what local governments could not.
The NPAD has estimated that the cost of expanding the program will amount to 523 billion won ($472 million).
In addition, the parties agreed to accept the Park administration's proposal in September to raise cigarette prices from an average of 2,500 won per pack to 4,500 won.
Despite the government's position that the move was necessary to curb the nation's high smoking rate, the opposition party had said it would disproportionately affect low-income people.
This will be the first price hike in a decade, following a 2004 increase from 2,000 won to the current price.
In exchange for the agreement on cigarettes, the ruling party agreed to reduce corporate tax exemptions and reductions. The NPAD had been calling for a hike in the corporate tax rate.
The parliament is notorious for fierce wrangling over the annual budget. This year, the government was nearly forced to draw up a tentative budget before the National Assembly approved the budget on Jan 1.
The revised National Assembly Law obligates lawmakers to complete their budget review by Nov. 30 and vote on it by Dec. 2.
National Assembly speaker Chung Ui-hwa had vowed to pass the bill by the deadline in a bid to set a precedent for future budget negotiations.