The Czech government collapsed after losing a parliamentary no-confidence vote regarding its handling of the economic crisis.
It was a huge embarrassment for prime minister Mirek Topolanek, coming just days before a planned visit by US president Barack Obama and midway through the Czech Republic's six-month European Union presidency.
The lower house of Parliament voted 101-96 to declare no confidence in the three-party coalition government, after four politicians broke rank with their parties and voted with the Opposition. Three members were absent from the vote.
It was the first time a government has been ousted by parliament since the country came into existence after the 1993 split of Czechoslovakia.
Mr Topolanek said he could resign after a planned trip to Brussels today. "I take the vote into account and will act according to the Constitution," he said.
There has been no indication of whom President Vaclav Klaus might choose to form a new Cabinet. If three attempts to form a government fail, early elections must be called.
Mr Topolanek's minority coalition took charge in January 2007, after months of difficult negotiations following 2006 general elections that resulted in no clear winner.
The government has struggled to resolve deep divisions within Parliament over whether to allow components of a US missile defence shield on Czech territory, and whether to adopt the EU reform treaty to streamline decision-making in the bloc.
In recent months, Opposition politicians also said they became frustrated with the government's response to the global economic slowdown. Before the crisis, the Czech Republic's export-oriented economy had been growing fast, but the country is expected to enter a recession this year. Annual industrial output fell 23.3% in January.
The opposition said the government acted too late and did too little - approving a stimulus package only last month worth 70bn koruna (€2.6bn), including measures for investments in ecology and infrastructure along with tax cuts and loan guarantees.
"The government got what it deserved," said former prime minister Jiri Paroubek, who leads the Opposition Social Democratic party. "It was not able to handle the affects of the economic crisis."
Mr Paroubek said, however, that he was not against Mr Topolanek's government staying in office until the end of the Czech term leading the EU presidency.
The European Union executive said it trusted the Czech Republic would be able to continue its duties in the EU presidency.
"It is for the Czech Republic's democratic process under the constitution to resolve the domestic political issues; the Commission is confident that this is done in a way which ensures the full functioning of the Council Presidency," the European Commission said in a statement.