Mr Kaczynski hinted at the prospect of early elections
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Poland's ruling conservatives are setting about forming a new government after Prime Minister Jaroslaw Kaczynski dismissed his populist deputy.
Andrzej Lepper had repeatedly criticised Mr Kaczynski's Law and Justice party over the budget.
Mr Lepper, a former pig farmer famous for organising farmers' protests, urged more help for rural areas and opposed sending extra troops to Afghanistan.
The ruling coalition has only been in power for four months.
Trading accusations
"I decided to ask the president to dismiss Andrzej Lepper," Mr Kaczynski said late on Thursday.
He said Mr Lepper had "gone back to his old practices of sowing discord".
In response, Mr Lepper accused the prime minister and his party of belittling him and not consulting him on major policy moves.
"They are not made for constructing, but for destroying. They will agree only with people who are on their knees before them," he said.
Mr Lepper enjoys strong support in the country's poorer rural areas, the BBC's Adam Easton reports from Warsaw.
In recent days he has demanded increased public spending on social welfare, healthcare and pensions in next year's budget, our correspondent says.
Early elections
Mr Kaczynski said he would try to assemble a new parliamentary majority with breakaway members of Mr Lepper's Self-Defence Party and another small rural-based group, the Polish Peasant's Party.
Early elections, probably to be held in November, would be the only solution if that failed, he said.
But fresh elections are unlikely to solve Poland's political crisis, says our correspondent.
According to surveys, none of the major parties seems capable of winning a majority.