If confirmed, it would be Spain's first coalition government since the country's return to democracy in the late 1970s.
However, even with a deal, the two parties still need to find more allies.
The Socialists and Podemos had tried and failed to strike a government deal after the April election, prompting Sanchez to call the repeat ballot.
The agreement, announced two days after Spain's general election on Sunday, marks an attempt to end a political deadlock that has forced Spaniards to go to the polls four times in as many years.
"Our desire is to achieve majority support in the chamber", he said, indicating they would approach other factions "to achieve a stable and sustained majority that would make possible not only an investiture vote but a legislature".
"We have reached an agreement to form a coalition government between Unidas Podemos and PSOE", Mr Alberto Garzon, leader of Podemos ally Izquierda Unida, said in a verified tweet.
Mr Iglesias said: "As I said on election night after hearing the results, what was a historical opportunity in April has become a historical necessity".
Both the Socialists and Podemos lost seats compared to April's election, with Sanchez's party taking 120, down from 123, while Podemos secured 35, down from 42.
The small leftist Mas Pais ("More Country") party won three seats, so the two bigger leftist parties would have to draw others in to boost their combined 155-seat tally.
JUST IN: Depositors fail to get new bank notes
ZBC News crew visited the central bank in Harare and witnessed cash delivery vans queuing to collect their consignment. The government unexpectedly re-introduced the Zimbabwe dollar in June to end a decade of dollarisation.
But most important would be the backing of centre-right Ciudadanos, analysts said.
Sanchez said he start talks with additional parties to reach a majority.
Centre-right party Citizens Party (Ciudadanos), which saw its support collapse to win just 10 seats, said it would not back the deal, calling instead for a grand coalition between itself, the Socialists and PP.
The right wing parties in Spain have accused Sanchez of being too soft on the Catalan independence movement.
"Ciudadanos can not support Sanchez and Podemos holding the reins of Spain's government", a party statement said, saying it would be "detrimental to the interests of most Spaniards".
Iglesias said that the coalition would bring together PSOE's experience and the courage of Podemos.
The two leaders have said that the coalition will form a "progressive government made up of progressive forces that are going to work for progress".
"It no longer worries him that Pablo Iglesias will be in his government but there are many Spaniards who will be anxious by this deal that they've just announced", Casado tweeted.
Acting USCIS Director Ken Cuccinelli said in September the proposed change would allow for better vetting and security procedures. If it is implemented, it would make the USA one of the few countries in the world that charges asylum seekers application fees.
Alec and Hilaria got married in 2012 and have four children including daughter Carmen and three sons Rafael, Romeo and Leonardo. Hilaria , 35, said she learned of the miscarriage during a scan on Monday - and the results left her "devastated".
The last scientifically validated sighting was in 1990, when a hunter killed one and donated the specimen to scientists. The species is believed to be endemic to Vietnam and was first depicted in the mid twentieth century and again in 1990.
And he looks back fondly on his short but successful time in Toronto. "I never went in with a negative mindset", Leonard said. Head coach Nick Nurse needed someone to come in and take over the role as a defensive stopper, and RHJ answered that call.
Nadine Coyle , Myles Stephenson , Kate Garraway and Andrew Whyment are also rumoured to have signed up but are yet to arrive. It seems that's not entirely true, as she reportedly took part in the very first series of I'm a Celebrity .
Her former club coach, Tom Alberti, said she attained a level 10, the highest level in the USA Junior Olympics Program. Coleman's name is inscribed on a banner in his gym, as are the names of her two sisters.
Indeed, the actress will appear posthumously in the upcoming " The Rise of Skywalker ", which will be released on December 20. I love that world [from Star Wars] and I love the idea of exploring new characters and new places in that universe.
Villa , Spain's record goal scorer with 59 in 98 appearances for his country, netted five times as they won the World Cup in 2010. His silverware also includes a Champions League title with Barcelona , as well as two LaLiga wins and a World Club Cup medal.
La confédération espagnole des transporteurs estiment les pertes pour le secteur à 15 millions d'euros par jour. Les manifestants déballent vivres, marmites et barbecues à gaz apportés pour tenir "trois jours" selon eux.
Jeff Driskel started at quarterback and said Sunday he learned only a few hours before kickoff that he would replace Stafford. But several players said the team disclosed on Saturday that Stafford wouldn't play.
MLB checking into report '17 Astros stole signs, broke rules
As mentioned previously, there is really no way you should discredit the Astros because of how historically good they were. Hinch gave this statement with a smug smirk that seems characteristic of the way the organization reportedly operates.
Flu Has Arrived, Deaths Reported in Washoe and Clark Counties
"Families often think of influenza as "just a bad cold" when we know instead it can be a serious and sometimes deadly infection". Two of the trivalent vaccines are designed specifically for people 65 and older to create a stronger immune response.
Lata Mangeshkar ‘critical, on ventilator’
A few days back, Lata Mangeshkar, who is active on Twitter had wished Padmini Kolhapure for her upcoming movie " Panipat ". When we asked her if she visited Lata Mangeshkar in the hospital, she replied, "I have not visited her yet".
Breaking down the new Sri Lankan bill against match-fixing
As per the new bill, people who "provide inside information", "deliberately misapply rules" including pitch curators is illegal. Offences related to corruption in sports will carry a prison term of up to 10 years, as well as various fines.