President Chandrika Kumaratunga has dissolved the Sri Lankan parliament, paving the way for snap elections.
President Kumaratunga sought to extend her term of office
National ballots for the 225-member legislature will be held on 2 April, nearly four years ahead of schedule.
Mrs Kumaratunga has been in a power struggle with Prime Minister Ranil Wickramasinghe since his party took control of parliament in December 2001.
The political battle between the two has undermined the peace process with the Tamil Tiger rebels.
The pair are divided over who should control the crucial defence ministry, which the president took away from the prime minister last November when she also declared a state of emergency.
Mr Wickramasinghe has argued that he cannot run the peace process with Tamil Tiger rebels without the defence portfolio.
For their part, the Tamil Tiger rebels have said the row has left the government crippled and undermines the ceasefire in the 20-year civil war.
The new elections give Mrs Kumaratunga's party a chance to win back full power, but the destructive rivalry could yet continue.
If Mr Wickramasinghe maintains his parliamentary majority, the same situation will exist.
His United National Party (UNP) and Muslim allies have 114 seats in the 225-seat parliament and the support of 15 Tamil legislators, while Mrs Kumaratunga's People's Alliance and the JVP together have 93.
The BBC's Frances Harrison in Sri Lanka says billions of dollars pledged in foreign aid may also be in jeopardy, particularly if the election campaign - the third in four years - becomes violent.
The dissolution of parliament allows the president to create new posts and ministries and Mrs Kumaratunga immediately appointed two of her own supporters.
Lakshman Kadirgamar, a former foreign minister, was appointed minister of information and telecommunication, while D M Jayaratne was made minister of posts and communication.
The prime minister and his cabinet, meanwhile, will assume caretaker functions with no power to make key decisions until the election, officials said.