Austrian Chancellor Werner Faymann resigned Monday, saying he lacked support in the Social Democratic party at a time when the country grapples with migration and economic problems.
The surprise move underlines the crisis his centre-left party faces amid growing popular support for the far-right Freedom Party.
After a meeting with party leaders, Faymann said he would step down as head of government and as party leader.
"This country needs a chancellor that has the full support of his party," the 56-year-old politician said. "This government needs a powerful new start."
Far-right opposition leader Heinz-Christian Strache, whose Freedom Party has been leading polls for the past year, called for early elections.
"It is now up to the Social Democratic Party or the People's Party to end their suffering," he said, referring to the government coalition.
Conservative Vice Chancellor and Economics Minister Reinhold Mitterlehner of the People's Party took over as interim chancellor until the Social Democrats come up with a new leader.
Interim chancellor Mitterlehner spoke out against calling early elections at this time and said the coalition should stay its course to deal with the country's problems.
"We don't want to convey a sense of turbulence," he said.
At the same time, Mitterlehner left open the possibility for elections when he said that his People's Party would not automatically accept any Social Democrat as chancellor.
The People Party's popular young foreign minister, Sebastian Kurz, is seen as a top candidate in a future parliamentary vote.
Several social democratic party leaders named Christian Kern, the 50-year-old head of the Austrian Federal Railways, as a worthy successor for Faymann.
Gerhard Zeiler, 60, has been named as another Social Democrat who might take over the ailing party and the government. He currently manages international broadcasters in the Time Warner media group.
Social Democratic leaders plan to name a successor by next week, and to take a formal decision on June 25.
Faymann's vulnerability became apparent two weeks ago, when the Social Democrat's presidential candidate faltered against the Freedom Party's contender, Norbert Hofer, in the first round of presidential elections.
Hofer won with more than a third of the votes. Those results, as well as strong polling numbers for the Freedom Party over the past 12 months, have led to a deep divide within the Social Democratic Party.
One side, led by trade unionists, leans towards anti-immigration policies and has criticized Faymann for ruling out any political cooperation with the Freedom Party.
Others want the party to return to its traditional left-wing politics.
Faymann had backed various new tough immigration policies in recent months, but it has not improved the popularity ratings of his party.
"It would have been irresponsible if we hadn't imposed measures of our own," Faymann said, pointing to the lack of EU-wide migration policies and the 90,000 asylum seekers that Austria took in last year.
Faymann took these measures "not because they were better, not because we shifted to another political direction, but because that's what reality called for," he said.
In addition to these problems, Faymann's chancellorship was marked by worsening job market data and lacklustre economic growth over the past months.
Faymann told the tabloid Oesterreich that he was considering taking on an EU job, having previously received offers to work in Brussels.