The People's Party named 40-year-old Josef Proell as leader late on Monday after the far-right had made big gains in Sunday's parliamentary election at the expense of the centrists.
Proell has a good rapport with Social Democrat head Werner Faymann, who is expected to be asked to form a government.
"I've always said that I can work well with him and now we can try and prove that," Faymann, whose party won the most votes on Sunday, told Austrian radio.
The Social Democrats and conservatives had ruled in a bickering coalition that lasted less than two years before collapsing in July, triggering the election.
Both parties plunged to their worst results since World War Two, while the far-right Freedom Party and splinter Alliance for Austria's Future, led by former Freedom Party leader Joerg Haider, garnered nearly a third of votes between them.
Haider said another grand coalition would be the worst-case scenario for Austria.
"Any combination, even one we are not part of, would be better than a coalition between the Social Democrats and conservatives," Haider told a news conference.
The mainstream parties have been hit by voter frustration over their bickering and concern at a looming economic downturn, inflation and immigration -- a mix which allowed the far right to make significant gains.
Personality Clashes
The outgoing government was particularly damaged by personality clashes rather than fundamental policy disputes.
Freedom Party leader Heinz-Christian Strache said Proell's arrival meant a centrist coalition was the most probable.
"Mr Proell is a grand-coalition builder, we know that," Strache told a news conference. "Proell's appointment shows that we are clearly heading in the direction of (a grand coalition)."
"At the moment we have no possible coalition partner, because both parties have excluded us."
But while a hard-right government with the conservatives now seems less likely, it would be a mistake to see the left-right coalition as a done deal, said political analyst Peter Hajek.
"Josef Proell is more inclined towards a grand coalition. But the People's Party has often suddenly changed its mind, so I can't be sure," he said.
Political analyst David Pfarrhofer said a remake of the centrist coalition would have to show significant differences from the last to convince a public that came to despise it.
"Above all, the style has to change. There is a lot of discontent. People don't want quarrels, they want a government," he told Austrian radio.
