The emir of Kuwait has accepted the resignation of the government, Kuwaiti state television says.
The cabinet's resignation on Monday was reportedly aimed at preventing attempts by legislators to question Sheikh Nasser Al Mohammed Al Sabah, the prime minister.
Nasser has been accused of mismanagement and misuse of government funds.
Sheikh Sabah Al Ahmed Al Sabah, the emir, asked the government to stay on until a new one was chosen, Kuwait TV said.
The cabinet resigned in November over a similar attempt by members of parliament to grill Sheikh Nasser.
However, after accepting the resignation, the emir reappointed Sheikh Nasser, his nephew, as prime minister.
Economic plan delayed
The political manoeuvring was likely to delay a $5.11bn economic rescue plan, meant to reduce the effects of the global financial crisis on the country.
Sheik Sabah can now re-appoint his nephew again, name a new prime minister to form a cabinet, or dissolve parliament and call new elections.
Shamlan al-Eissa, a political analyst, said the prime minister was not likely to be re-appointed.
"I personally expect parliament to be dissolved or bring a new cabinet headed by a new prime minister," he said. "The crisis has reached a stage which requires a change in government."
Parliament was last dismissed in March 2008 in a bid to end clashes between the government and parliament members.
Kuwaiti leaders have dissolved the legislature five times since 1976, mostly to prevent legislators from interrogating cabinet members or calling no-confidence votes.
No head of government has ever faced questioning by legislators.