Latvian president Valdis Zatlers has called for the dissolution of parliament after MPs blocked an anti-corruption probe against a prominent politician.
The move means a referendum will be held in the next few months on whether to break up parliament and hold new elections.
It sets the stage for political turmoil in recession-scarred Latvia, which was forced to seek a £6.4 billion international bail-out to repair its crippled economy.
A presidential election is expected next week in parliament, and Mr Zatlers said he realised his chances of re-election could be hurt.
But in a speech to the nation he said he felt compelled to stop corrupt practices which had left people without confidence in the Baltic country's politicians.
The speech comes on the heels of a vote on Thursday in the Saeima - parliament - that blocked the country's anti-corruption bureau from searching the home of Ainars Slesers, a powerful politician known as one of Latvia's three oligarchs.
"The Saeima vote on Thursday unfortunately is like a siren that warns about a serious conflict between legislative power and the justice system - two of the three powers on which our country is based," Mr Zatlers said.