After the Centre Democrats left the government coalition in 1996, the sitting Danish Prime Minister Poul Nyrup Rasmussen was able to form a government coalition of his own Social Democrats and the Danish Social Liberal Party. The resulting cabinet, which replaced the Cabinet of Poul Nyrup Rasmussen II, was formed on 30 December 1996 and was called the Cabinet of Poul Nyrup Rasmussen III.

The Social Democrats is a social democratic political party in Denmark. A member of the Party of European Socialists (PES), the Social Democrats have 50 out of 179 members of the Danish parliament, Folketing, and three out of fourteen MEPs elected from Denmark.