Two Janata Parivar outfits -- the Janata Dal-United and Samata Party -- merged on Thursday.
Samata Party chief George Fernandes will head the new party, to be called JD-U.
The merger will be formalised at a meeting of the national council of the parties.
Announcing this at a press conference in New Delhi, Samata leader and Railway Minister Nitish Kumar said the unified party would have the JD-U's symbol of 'arrow' and the 'white and green' flag of the Samata.
He said Sharad Yadav, who was JD-U president, would head the parliamentary board of the new party.
Fernandes said efforts would be made to rope in other splinter groups of the Janata Parivar within the National Democratic Alliance.
However, the O P Chautala-led Indian National Lok Dal has decided not to merge.
Asked if the purpose was to act as a pressure group within the NDA or to float a third front before the general election, he said no such opinion was expressed at the meetings of the two parties' leaders.
Referring to the coming assembly elections, Fernandes said the unified party would have a tie-up with the Bharatiya Janata Party "to the extent possible".