Greece’s Prime Minister Alexis Tsipras has announced he is resigning and has called an early election.
Mr Tsipras, who was only elected in January, said he had a moral duty to go to the polls now a third bailout had been secured with European creditors.
The election date is yet to be set but earlier reports suggested 20 September.
Mr Tsipras will lead his leftist Syriza party into the polls, but he has faced a rebellion by some members angry at the bailout’s austerity measures.
He had to agree to painful state sector cuts, including far-reaching pension reforms, in exchange for the bailout – and keeping Greece in the eurozone.
Greece received the first €13bn ($14.5bn) tranche of the bailout on Thursday after it was approved by relevant European parliaments.
It allowed Greece to repay a €3.2bn debt to the European Central Bank and avoid a messy default.
The overall bailout package is worth about €86bn over three years.
Alexis Tsipras made the announcement in a televised state address on Thursday.
“The political mandate of the 25 January elections has exhausted its limits and now the Greek people have to have their say,” he said.
“I want to be honest with you. We did not achieve the agreement we expected before the January elections.”
Mr Tsipras said he would seek the Greek people’s approval to continue his government’s programme.
Analysis: Chris Buckler, BBC News, Athens
In January, Alexis Tsipras went to the polls in Greece as a man who would stand against austerity. What a difference seven months makes. Now he is calling elections to ask the Greek public to support the way he is trying to lead this country out of its financial crisis.
That means spending cuts, tax rises and, of course, that third bailout that’s already been agreed. All of that is opposed by a sizeable number of hard-left MPs within his own party, Syriza.
Mr Tsipras will argue this election is about bringing certainty to Greece’s future. In the short-term at least, though, it will create political uncertainty. And that’s becoming a pretty familiar feeling here in Athens.
Mr Tsipras said Greeks would have to decide whether he had represented them courageously with the creditors.
He met President Prokopis Pavlopoulos later in the evening to submit his resignation, Reuters reported, telling him: “The present parliament cannot offer a government of majority or a national unity government.”
Greece will be run by a caretaker government ahead of the polls.
If a government resigns within a year of election, the constitution requires the president to ask the second-largest party – in this case the conservative New Democracy – to try to form an administration.
If this fails, the next largest party must be given a chance.
Analysts say both parties can waive this and allow the president to approve the snap election.
However, New Democracy leader Vangelis Meimarakis said it was his “political obligation and responsibility to exhaust all the options”, even though the numbers suggest he has little chance.
Reacting to the news, Martin Selmayr, European Commission President Jean-Claude Juncker’s chief-of-staff, tweeted that “swift elections in Greece can be a way to broaden support” for the bailout deal.
Chair of the eurozone finance ministers, Jeroen Dijsselbloem, said he hoped the resignation would not affect the bailout conditions.
“It is crucial that Greece maintains its commitments to the eurozone,” he said.
Some 43 of Syriza’s 149 MPs had either opposed the bailout or abstained in last Friday’s Greek parliamentary vote that approved the deal.
The rebellion meant Mr Tsipras had effectively lost his parliamentary majority.
Mr Tsipras had won power on a manifesto of opposing the stringent austerity conditions that he has now accepted.
He said he was forced to do so because a majority of Greeks wanted to stay in the eurozone, and this could not be achieved in any other way.
Greece remains under strict capital controls, with weekly limits on cash withdrawals for Greek citizens.
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