Under the new agreement, Samajwadi Party will contest 298 seats and the Congress will have 105 seats to fight from in the upcoming polls, according to SP leader Naresh Uttam.
Ending speculations that were doing the rounds on the possibility of both the parties contesting the state elections together, the alliance was sealed after the Congress party settled for 105 seats instead of 121 which they had demanded earlier, ANI reported.
The Samajwadi Party president and Uttar Pradesh chief minister Akhilesh Yadav, on Saturday, said that the final offer for the Congress party was 100 seats.
Congress general secretary Ahmed Patel said that Priyanka Gandhi intervened to end the deadlock over the alliance to counter the Bharatiya Janata Party (BJP) in the politically crucial state.
"Wrong to suggest lightweights were dealing on behalf of Congress party. Discussion was at highest level- between CM (UP),GS I/C & Priyanka Gandhi," he tweeted.
Blaming the Congress for its "stubborn" attitude, the Samajwadi Party leader Naresh Agarwal on Saturday said the possibility of an alliance was "almost over".
"The Chief Minister (Akhilesh Yadav) had made an offer of 100 seats to the Congress, but they are asking for 120 seats. We told them that we have 234 sitting legislators and there are some others who will also contest. So, we need at least 300 seats for ourselves," Agarwal told ANI.
On Friday, Akhilesh Yadav announced the list of candidates for the first three phases of assembly elections.
Uttar Pradesh will go to polls beginning February 11 in seven phases. The results will be announced on March 11.
Mulayam skips SP's manifesto meet
Earlier in the day, Samajwadi Party's Akhilesh Yadav released the manifesto Sunday, though Mulayam Singh Yadav and his brother Shivpal skipped the event, inflaming rumours of continued infighting.
Senior SP leader Azam Khan rushed to Mulayam's bungalow to bring him to the event. But even then the patriarch did not grace the occasion where senior party leaders and Dimple Yadav, MP and wife of the chief minister, were present.
The ruling party has been dogged by skirmishes for the past few weeks as father Mulayam and son Akhilesh were at each other's throats over a catalogue of issues.
The party was divided into two factions -- one led by Akhilesh and the other by Mulayam and his brother Shivpal. Both camps went all out to undermine each other's influence, only for a last-minute patch-up between the blocs.
On Sunday, Akhilesh spoke announced schemes which prioritises development of the state.
The SP manifesto announced distribution of laptops, Kanya Vidya Dhan, Samajwadi Pension, laying of Purvanchal Expressway, and establishing Janeshwar Mishra model villages besides improving helplines for police and women.
He said the model villages in the name of Janeshwar Mishra would be a tribute to the Samajwadi leader on his death anniversary today.
The Chief Minister, in his new role as the Samajwadi Party national president, directed all candidates to prepare a road map for development of their respective Assembly constituencies.
A highlight of the manifesto was Samajwadi Kisan Kosh for farmers to purchase seeds and fertilisers, perhaps to match the Pradhan Mantri Kisan Bima Yojana.
The Lucknow-based party also released a list of 77 candidates who would contest the ensuing elections.