The Turkish Cypriot minority government has resigned, ditching efforts to forge a new coalition after a failed referendum to reunite the island.
Turkish Cypriots supported the UN plan for reunification
Rauf Denktash, the leader of the self-declared Turkish Republic of Northern Cyprus, accepted the resignation.
Prime Minister Mehmet Ali Talat will stay in office until a new government is formed.
Mr Talat's coalition has been paralysed since it lost its slim parliamentary majority in April.
Mr Denktash will meet with party leaders in the coming days
to discuss the possibility of forming a new government.
If a government cannot be formed, early elections will be called and are likely to be held within 60 days.
"If we can't succeed in forming a new government our
people will decide" in new elections, Mr Talat said.
"We will carry out responsibilities fully until a new
government is formed."
Several parliamentarians resigned from the two parties in the coalition following a failed referendum in April on a UN plan to reunite the island, reducing it to a minority government.
The coalition, which came to power earlier this year, is made up of Mr Talat's Republican Turkish Party and the Democrat Party.
Mr Talat supported the plan, but his coalition partner, Serdar Denktash, did not.
Turkish Cypriots in the north of the island voted for the plan, but it was defeated when Greek Cypriots in the south rejected it.
As a result, the benefits of joining the EU only apply to the Greek Cypriot part of the island.
The Turkish Republic of Northern Cyprus was declared in 1983, but has been recognised only by Turkey itself.