Irish Prime Minister Brian Cowen announced plans to dissolve the parliament next month and call for a general election early next year after the legislature passes the 2011 budget.
Monday's announcement followed the government's decision to sign off on a $100 billion bailout by the European Union and the International Monetary fund.
The bailout will likely bring even deeper cuts to the Irish people already burdened with high unemployment, stagnating growth and recession.
"There are occasions when the imperative of serving the national interests transcends other concerns, including party political and personal concerns. This is one such occasion," the prime minister said in a statement issued on Monday.
Cowen said the government was taking the necessary steps to ensure receipt of the bailout funds.
The decision was precipitated in part when the Green Party - the coalition partner of the prime minister's Fianna Fail party - announced plans to leave the government next month after the budget and fiscal packages are passed.
General elections will probably be held early in 2011.
Ireland's dour economic state and political instability are not unlike several other European countries, including France, Spain and Portugal, which are also dealing with deepening recession and financial crises.