Vaclav Klaus, the Czech president, has accepted the resignation of the prime minister's minority government after it lost a confidence vote last week.
Mirek Topolanek, the Czech prime minister, lost the vote following a lower house deadlock over an inconclusive June general election which left the country's leftist and centre-right parties with 100 seats each.
The government lost by 99 votes to 96, when Socialists and Communists united against Topolanek's Civic Democratic Party and its partners, the Greens and Christian Democrats.
Klaus will meet leaders from all five political parties in the lower house on Thursday and has pledged several times to wait to nominate a new prime minister until after local and senate elections that run until the end of the month.
When he tabled the parliamentary confidence vote, Topolanek had made it clear that his cabinet wanted to hold early parliamentary elections, admitting he was unable to break the political deadlock.
"We all now should wish to have a strong government ... a trustworthy government," Topolanek said after the resignation was accepted.
"The fastest way to such a cabinet is an early election."
According to the Czech constitution, after the cabinet's resignation the president will appoint a new prime minister.
If the next attempt to form a cabinet fails, the speaker of the lower chamber - currently a Social Democrat - will propose a new prime minister.
Klaus cannot call for an early election unless three governments fail to win a confidence vote. But he could get the parties to agree to a constitutional change, where a three-fifths majority in both the lower house and the senate decide to shorten the lower house's term.
The local elections on October 20 to 21 and the senate vote the same weekend - with a second round scheduled for October 27 to 28 - will not directly impact the situation in the lower house.
But politicians are watching the results to see if the four-month stalemate has hurt their parties and whether they would fare better or worse if early elections were held.