German Chancellor Gerhard Schroeder has lost a confidence vote in parliament as he intended, paving the way for its dissolution and early elections.
Mr Schroeder is taking a huge political gamble, say analysts
Mr Schroeder had urged deputies to vote his government down, so he could seek a new mandate for controversial reforms.
President Horst Koehler must now decide if there are grounds to call elections a year ahead of the original schedule.
An early election is expected to hand power to the conservative Christian Democrats (CDU).
But Mr Schroeder's hand was forced by defeat in a key state poll in May, when his Social Democratic Party (SPD) lost its former stronghold of North Rhine-Westphalia to the CDU.
After Friday's Bundestag vote Mr Schroeder met President Koehler to request a dissolution of parliament.
CDU leader Angela Merkel told the Bundestag that Mr Schroeder's SPD-Green coalition "can no longer govern".
Pressure for polls
Polls show 70% of Germans want early elections, which would probably be held on 18 September.
Mr Schroeder pointed out in his speech that all Germany's parties wanted early elections.
He said his government now had a diminished capacity to act after a string of defeats in regional elections.
"Without a new mandate my political programme cannot be carried forward," he said.
Some experts questioned whether Mr Schroeder's confidence vote move was constitutional.
Many MPs from among Mr Schroeder's own Social Democrats and his Green Party coalition allies opposed the move.
But when it came to the vote in the Bundestag (lower house), 151 members backed the government, 296 voted against and 148 abstained.
The loss of North Rhine-Westphalia - including the industrial Ruhr region - was seen as a crushing blow to the already wounded chancellor.
"The bitter result... jeopardises the political basis for the continuation of our task," Mr Schroeder said at the time.
With a 17% lead in opinion polls, CDU politicians are eager for early elections and a win that would make Ms Merkel Germany's first female leader.
"There will be new elections in Germany. This means a change in the content and style of politics," said Christian Wulff, Lower Saxony's conservative prime minister and Germany's most popular politician.
"Then the hard work will begin. Our leader, Angela Merkel, will carry out the kind of economic reforms that were implemented in Britain over the last 15 years."
Mr Schroeder's government has lost much support because of Germany's poor economic performance and the unpopular reforms it has pushed through.
Above all, voters appear to be fed up with the government's inability to bring down Germany's high unemployment rate of 11.3% - some 4.7 million people, according to the latest figures.