A decree has been prepared which will take away the Turkish citizenship of Merve Kavakci, after it was revealed that she became a dual citizen of the United States last March.
Correspondents say it would be a convenient way for caretaker Prime Minister Bulent Ecevit to bring to an end the bitter headscarf dispute that has repeatedly thrust the status of Islam back into the political spotlight.
Turkey, which is officially secular, regards the wearing of the Muslim headscarf as a pro-Islamic statement and has banned them in public institutions.
Expulsion from Turkey
Ms Kavakci's stand, with the full backing of the leader of the Virtue Party to which she belongs, has outraged the country's political elite.
The Turkish cabinet said it took the measure to revoke her citizenship because the deputy failed to notify the correct authorities that she was also a citizen of the US.
If the move is approved by the president, Ms Kavakci could then be expelled from the country.
Speaking on Wednesday, Mr Ecevit said: "She did not obtain permission ...this is illegal. Her parliamentary mandate is no longer valid even if she uncovers her head."
Coalition fears
Ms Kavakci is now under investigation by the electoral board and the Ministry of the Interior.
But even if the cabinet's move is successful, fresh trouble over headscarves is already brewing for the prime minister, who is attempting to assemble a coalition government.
The ultra right-wing nationalist Action Party is the second-largest party in parliament. It wants an end to the ban on students wearing headscarves in universities, while Mr Ecevit is adamant that it must be maintained.
The prime minister will meet party leaders for a second round of talks next week. He still appears confident that a strong government will emerge.
Last week, Turkey's chief prosecutor began legal moves to ban the Virtue Party on the grounds that it is trying to overthrow the country's constitution by persisting with its support for Ms Kavakci.
She failed to attend parliament on Wednesday when it reconvened for the first time since the headscarf row erupted.
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