After repeatedly denying about the alliance, both parties have reportedly come to consensus and have decided on giving away four out of seven Lok Sabha seats in Delhi to AAP and remaining 3 seats will be given to Congress.
The sources suggest that party headed by former Chief Minister Sheila Dikshit in Delhi will be contesting from New Delhi, Chandni Chowk and North-West Delhi seats; whereas AAP will be contesting from remaining 4 seats.
In Haryana, the Kejriwal-led party will be contesting on only one seat; whereas Congress will be contesting from remaining 9 seats.
The speculation of a tie-up between both the parties got a boost after AAP's Rajya Sabha MP Sanjay Singh met All India Congress Committee (AICC) in-charge of Delhi P C Chacko Wednesday evening.
The AAP has been batting for a tie-up, with the Congress citing the need to defeat the BJP and replace the Modi government in the national interest.
However, the Delhi Congress is a divided house, with its president Dikshit and her three working presidents, along with some other leaders, opposing the tie-up with the ruling party.
Dikshit met Gandhi over the issue twice and conveyed her message to him.
After a meeting with Gandhi last month, she claimed there was "unanimity" in the party against an alliance with the AAP.
Rajesh Lilothia, working president of the Delhi Congress, said the alliance will "ruin" the party in Delhi and this stand was clearly stated by Dikshit in her meeting with Gandhi on April 2