MDC backs Tsvangirai on unity government with Robert Mugabe

"The national executive committee has recommended that the party joins the inclusive government, the national council is expected to endorse that decision," one MDC source said.

That increases the chances of implementing a long stalled power sharing deal seen as a way to tackle the spiralling economic and humanitarian crisis.

With the local currency almost worthless and the world’s highest inflation rate, the government announced on Thursday it would let Zimbabweans use foreign currency. Over half the population is in need of food aid.

Regional leaders had piled pressure on both sides to implement the power-sharing deal they signed in September and South African President Kgalema Motlanthe said on Friday his country was ready to help rebuild Zimbabwe once that happened.

"This stage is really critical in terms of achieving political stability and the first step towards the economic recovery of that country," Motlanthe told Reuters at the World Economic Forum annual meeting in Davos.

The September 15 power-sharing agreement has been stalled by a dispute over control of key cabinet positions. Tsvangirai’s party feared being sidelined in a joint administration.