A general election will take place on Friday March 11, the Taoiseach informed the Dail this afternoon.
Amid chaos and controversy following the resignation of six Cabinet ministers, Mr Cowen made an apparent climbdown from a reshuffle, instead choosing to reassign portfolios.
In statement to the Dail the Taoiseach said the coalition Government would continue in power until the Finance Bill, giving effect to Budget 2011, and other important legislation is passed.
Mr Cowen said: "I believe it is important in the weeks ahead that the Government gives legislative effect to the Budget through the enactment of the Finance Bill and other related Bills which benefit the people.
"There`s nothing more important than doing precisely that."
The Government was thrown into turmoil in the last 24 hours after five resignations - Mary Harney from health, Dermot Ahern from justice, Noel Dempsey from transport, Tony Killeen from defence, and Batt O'Keeffe from enterprise.
Their departures came on the back of the resignation of Micheal Martin from foreign affairs on Tuesday night after a failed leadership challenge.
Mr Cowen was widely believed to be plotting a reshuffle to fill the empty Cabinet seats after Mr Dempsey claimed the announcement of resignations was in the planning for weeks.
But in an apparent U-turn under pressure from junior coalition Government partners the Green Party, the portfolios were being reassigned.
Tanaiste (deputy PM) Mary Coughlan, already in charge of education, will take on health, Agriculture Minister Brendan Smith takes on justice, Social Protection Minister Eamon O Cuiv has been given the defence brief, and Pat Carey, Minister for Gaeltacht, Community and Rural Affairs, has control of transport.
Tourism Minister Mary Hanafin, who voted against Mr Cowen remaining leader of the ruling Fianna Fail party in this week's leadership heave, has been asked to take the Enterprise portfolio.