German President Horst Koehler gave Chancellor Gerhard Schroeder the early election he sought tonight, agreeing that the government no longer had the support it needed to rule after a vote of no confidence.
Mr Koehler said in a televised address that he was dissolving parliament for an election that will likely be held on September 18th.
The President said Germany faced "giant tasks" in attacking its high unemployment rate and swollen budget deficits.
"In this serious situation, our government needs a government that can pursue its goals with steadiness and vigour," he said.
Mr Schroeder welcomed Mr Koehler's decision and said that he would seek re-election as chancellor to get new support for his economic programme, which he called "correct and necessary."
"The majority of people in our land want new elections. This way they can decide themselves the direction in which our country will go," he said.
Most observers had expected Mr Koehler to give the green light, and the major parties have already launched their campaigns.
So far, Mr Schroeder's Social Democrats lag behind the conservative opposition led by Angela Merkel.
Since winning re-election in 2002, Mr Schroeder has struggled to push through limited cuts in jobless benefits and worker protections in an attempt to get the sluggish economy going. But his reforms, which included slashing long-term jobless pay in an attempt to prod people to accept jobs, have provoked opposition from within his own Social Democratic Party.
After his party badly lost a key regional election on May 22nd, Mr Schroeder said he had lost his mandate to govern and called for new elections. To get them, he deliberately lost a no-confidence vote on July 1st by asking his own supporters to abstain - a tactic he used because the German constitution does not permit parliament to dissolve itself.
By law, only Mr Koehler could make the decision to hold new elections. That decision may face a court challenge from deputies who have said the government does not really lack a working majority.