An official government statement said: "The Council of Ministers ... decided to initiate constitutional procedures stipulated in article 3 of the 1964 Emirates Inheritance Law."
This article stipulates procedures for the removal of the amir on health grounds, it said.
The statement said the move came due to the poor health of the amir.
However, signalling discord, Shaikh Saad officially asked that he take the oath of office on Sunday.
Jasim al-Khurafi, the parliament speaker, said he had received a letter from the amir asking for parliament to be convened so that he could take the oath on Sunday.
The cabinet meeting came one day after the overwhelming majority of the ruling al-Sabah family expressed their trust in Shaikh Sabah al-Ahmad al-Sabah, the prime minister, and called on him to become amir.
Shaikh Sabah, the prime minister,
could become the amir
Kuwaiti newspapers reported on Saturday that the cabinet was expected to refer the health condition of Shaikh Saad to the elected parliament ,in accordance with the constitution and a 1964 law.
Under the law, if the amir's health prevents him from carrying out his duties, the cabinet should ask parliament to relieve him of his powers, paving the way for the appointment of a new ruler.
To vote the amir out of office, the parliament needs a two-thirds majority of the 65-member house, which includes 16 cabinet ministers who can also vote.
The cabinet's move also comes as the backdrop of a statement late on Friday by leading family member Shaikh Salem al-Ali al-Sabah who declared his backing to Shaikh Saad, whom he said would take the oath in parliament.
All Kuwaiti dailies ignored the statement whose authenticity could not be verified.