Prime Minister Mette Frederiksen and her allies on the left won a majority in a November 1 general election, but she chose instead to form a government with a small new centrist party and her traditional rival on the right, the Liberals.

"We are joining forces not because we couldn't do otherwise, because we could have done something else", Frederiksen told reporters at a press conference with the other two party leaders.

"But together we have made the decision to join forces. We choose each other at this point in our history," she added.

Frederiksen is expected to present her cabinet on Thursday.

Danish media have described the coalition, which includes the centrist Moderates party recently founded by former prime minister Lars Lokke Rasmussen, as historic.

The Social Democrats and Liberals have only governed together once before, for just over a year in 1978-1979.

The head of the Liberals, Jakob Ellemann-Jensen, faced the toughest questioning at the press conference, after campaigning during the election to head a right-wing government and rejecting any notion of an alliance with Frederiksen.

"Should I let my pride get in the way... of doing what is right for Denmark?" he replied.

Frederiksen presented the new government's priorities, which included an acceleration of Denmark's defence investments after the invasion of Ukraine, and a faster reduction of CO2 emissions. The country now aims to be carbon neutral by 2045 instead of 2050.

The country of 5.9 million now also expects to reach NATO's budget goal of 2 percent of GDP in 2030 three years earlier than planned.

The country will abolish a public holiday in order to finance the measure.

The new government also announced a tax reform, raising income taxes for the middle class, cutting taxes for high-earners, and introducing a new tax for very high earners.

In a country that has had strict curbs on immigration for the past 25 years, the government also said it would go ahead with previously announced plans to open asylum reception centres outside Europe, possibly in Rwanda.