A junior party in the Czech centre-right coalition called on its ministers to quit the cabinet on Jan. 10 due to a row with Prime Minister Petr Necas, a move which could bring down the government.
The crisis comes after Necas removed Karolina Peake, leader of the LIDEM junior coalition partner from her post as defence minister earlier on Thursday, just a week after she took office.
It also follows a vote in the lower house on Wednesday where the coalition pushed through bills to hike taxes and cut the 2013 budget deficit.
LIDEM's departure from the cabinet, where it has three ministers, would weaken the already minority administration a year and a half ahead of an election planned for mid-2014.
The cabinet has pushed through mild reforms of the social, health and pension systems, and is on target to cut the state fiscal gap below an EU-prescribed 3 percent of GDP in 2013.
The central European country of 10.5 million enjoys investors' confidence thanks to low government debt and its budget plans, but the reform drive and two years of austerity have eroded the government's support among voters.
The government could stumble through the rest of its term but with limited power to advance further legislation, or it could fall as a result of the crisis, provoking early polls.
"I suppose that this means departure to opposition. Our ministers got clear instruction from the leadership to leave the cabinet on Jan. 10," Peake told reporters.
She said the party had not decided if it would support any opposition efforts to overturn the government, suggesting there might be a chance for Necas to hang on to power.
"I assume we would discuss how to vote in a no-confidence motion when the situation comes up," she said.