Unable to cobble together a workable coalition, Greek President Karolos Papoulias has called for all parties to meet with him Wednesday to set up a caretaker government that will conduct new elections.
Greece has been in a political deadlock since elections 10 days ago left no party with a majority. The leaders of three different parties have tried to form a coalition, but all have failed.
That leaves the debt-racked country facing another vote, probably in mid-June, Paopulias' office said Tuesday.
The announcement comes as the Greek debt crisis threatens the stability of the European Union's single currency.
Europe is worried Greece could fail to make debt payments as early as next month. And that could force the country out of the euro, the currency used by 17 European Union countries.
The European Central Bank and International Monetary Fund have been pumping money into Greece to keep the country in the euro, but they have demanded that the Greek government slash spending to get the funds.
When angry voters went to the polls on May 6, they punished politicians who imposed the austerity measures, greatly reducing the number of seats held by the center-right New Democracy party and the Socialist PASOK party.
Radical leftist leader Alexis Tsipras, whose Syriza party reaped the benefits of voter frustration with austerity, urged Greeks on Tuesday to continue resisting "the parties of the bailout."
"They asked us to leave the country without any hope," he said, arguing that the May 6 election had left the terms of the bailout "null and void."
New Democracy leader Antonis Samaras, meanwhile, said his party would "keep fighting for a developing Greece within Europe" and "against those who say they want to get Greece out of Europe."
His party narrowly came in first in the May 6 elections, but opinion polls since then have suggested that Syriza would finish in first place in a new election.
Analysts have warned that Greece must not remain without a government for long.
"If no government is in place before June when the next installment (of loan money) from the European Union and International Monetary Fund is due, we estimate that Greece will run out of money sometime between the end of June and beginning of July, at which point a return to the drachma would seem inevitable," Bank of America/Merrill Lynch wrote in a report released Friday.
