Okay, to get you up to speed, in Canada we run on a Westminister system of parliamentary government.
which allows the queen's rep - in our case the Governor General - certain powers:
An example of this was the so called
A coalition government is allowed in this type of system and has actually been the case several times prior.
This isn't some arcane concept brought out by bitter parties but an actual part of the rules by which our country is governed.
Okay, now that we're on the same page, this is how it stands as I see it (granted, again, I am not the big Poly-Sci guy):
The Blue party became the government with a minority - choosing not to form a group with another party for a majority. They put through a budget that the other colors didn't like and in voting it down would normally force a new election. To prevent a new election, the other colors are forming a group which, having the majority, are recommending that they be the government instead of having to go through a new election (a side note - had they done this right after the election, they would have been the ruling party instead).
The Governor General, being the GM of parliament, will have to decide this on Monday.
It should be an interesting weekend.
2008 dispute wiki