Peruvian President Alejandro Toledo has asked for the resignation of the country's first woman Prime Minister, Beatriz Merino, and the entire cabinet.
President Toledo's approval ratings are below 20%
President Toledo had reportedly disagreed with Dr Merino over new appointments after several cabinet posts became vacant in November.
The move comes after days of sustained criticism of the prime minister in local news media.
Dr Merino is visiting the United States and is expected to return on Sunday.
A statement by the president's office said a new cabinet would be sworn in on Dr Merino's return.
The prime minister currently enjoys approval ratings of over 50%, compared with under 20% for President Toledo.
Loss of confidence
Correspondents say Dr Merino is seen as key to helping Mr Toledo reform Peru's weak institutions, improve tax collection and drive economic growth.
But local media reported that she lost the president's confidence after publicly complaining about an alleged smear campaign against her involving accusations that she was a lesbian - which she says are untrue - and that she found government jobs for several friends.
"Dr Merino is out of the government. As soon as she gets back she will be replaced," said newspaper editor Augusto Alvarez in a radio interview.
But the news magazine Caretas suggested that the prime minister's popularity might have sparked envy among political rivals, and even the president himself.