Talks to form a coalition government led by Austria's far-right Freedom Party (FPO) will begin on Friday, the party said on Thursday, as thousands protested in Vienna against the prospect of the country's first FPO-led government.

VIENNA (Reuters) - Austria's far-right Freedom Party (FPO), which won September's parliamentary election with 29% of the vote, is due to start coalition talks with the conservative People's Party (OVP) this week aimed at creating the country's first FPO-led government.

The leader of the anti-immigrant Freedom Party of Austria, founded by former Nazis in the 1950s, was expected to be asked to enter into talks to form a new government.

Austria headed on Sunday towards coalition talks led by the far-right Freedom Party (FPO) after efforts to form a government without the party fell apart and prompted Chancellor Karl Nehammer to resign.

Austria's far right, tasked for the first time with trying to form a government, warned on Tuesday of a "difficult" mission as relations with the conservatives are tense.

Austria's conservatives said Sunday they were ready to start negotiations with the far-right Freedom party (FPOe) to form a new government, a policy U-turn after coalition talks with two centrist parties failed.

Following the failure of talks to form a three-party government in Austria, the Social Democrats (SPÖ) are is ready for talks on a potential coalition with the conservative Austrian People's Party (ÖVP),