Austrian Chancellor Sebastian Kurz called for an early election after his vice chancellor resigned on Saturday over a covertly shot video that showed him apparently promising government contracts to a purported Russian investor.
Mr Kurz said he would ask President Alexander Van der Bellen to set a date for a new election "as soon as possible".
Vice Chancellor Heinz-Christian Strache resigned after two German publications, the daily Sueddeutsche Zeitung and the weekly Der Spiegel, on Friday published extracts of a covert video purportedly showing him offering Austrian government contracts to a Russian woman who was allegedly interested in investing large amounts of money in Austria.
Mr Strache's far-right, anti-immigrant Freedom Party is the smaller partner in Austria's ruling government coalition with Mr Kurz's People's Party.
At a news conference late Saturday, Mr Kurz said talks with remaining officials from the Freedom Party showed they were not willing to make the changes he felt necessary to continue the current coalition.
Mr Kurz also said a possible coalition with the centre-left Social Democrats would derail the government's programme of limiting debt and taxes.
Mr Strache's resignation was a black eye for the populist and nationalist forces who favour tighter European immigration policies.
It came only a few days before the May 23-26 European elections.
In his resignation statement earlier Saturday, Mr Strache apologised but said he was set up in a "political assassination".
He conceded his behaviour in the video was "stupid, irresponsible and a mistake".
In the video, the source of which the publications declined to reveal, Mr Strache and party colleague Johann Gudenus are heard telling the unnamed woman she could expect lucrative construction work if she bought Austria's Kronen Zeitung newspaper and supported the Freedom Party.
The video spanned six hours of drink-fuelled conversation in a villa on the Spanish island of Ibiza between the Austrian politicians and the woman, who claimed to be the niece of a prominent Russian businessman.
The 49-year-old politician said he had been in a state of "increasing alcohol intoxication" and had "behaved like a teenager" in an attempt to "impress the attractive host".
He said he had had no further contact with the woman and she did not donate to his party. He claimed to be a victim of the illegal use of surveillance equipment.
In the video, Mr Strache also appeared to suggest ways of funnelling money to his party via an unconnected foundation to circumvent Austrian rules on political donations.