Joerg Haider had headed the Freedom Party, which garnered two-thirds of the vote in 1999, and became the second largest political party in Austria and part of the coalition government in Vienna, the BBC reported.
However, the Freedom Party's victory triggered protests and Jaider retreated giving up the leadership of the party, however, his followers stayed in government positions, the Guardian said.
Last November, the Freedom Party polled just 10 percent of the vote.
The new Alliance for Austria's Future will try to re-engage lost voters, while Freedom Party ministers in Austria's ruling coalition can join the new party and still keep their jobs, according to Haider.
"We have reached a crossroads," he said.