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The magnetic and thermodynamic properties of iron-cobalt alloys have been investigated by means of first-principles density-functional calculations. A cluster expansion (CE) bridged the quantum and the statistical mechanics, providing a set of magnetically implicit effective cluster interactions (ECIs). Our results show that magnetism is crucial to the ordering tendencies in iron-cobalt: A non-spin-polarized calculation predicts Fe-Co as a phase separating system. This is also true in the case of atomic defects for the B2 (CsCl) phase of FeCo, where magnetism stabilizes the system against a spontaneous formation of antistructure atoms. As a by-product, our analysis helps to elucidate the origin of the controversy on the existence of a low-temperature Fe₃Co ordered phase. (C) 2003 Elsevier B.V. All rights reserved