Romania was thrown into political turmoil yesterday following the dismissal of the prime minister, Mr Radu Vasile, by President Emil Constantinescu, hours after seven government ministers resigned.
Analysts had long predicted the move following intense political in-fighting and unrest among the country's 23 million people because of a dramatic fall in living standards recently.
Ill-feeling towards the government led to widespread violent labour unrest and street protests.
Mr Vasile, who had been prime minister for 21 months, vowed to stay in office despite claims that this was unconstitutional. He went on television to defend his record, saying: "I don't resign for moral reasons. I explicitly demand an explanation."
The crisis comes at a politically fragile time for Romania, which just last weekend was invited along with other post-communist countries to join in accession talks for membership of the EU.
The country is also in limbo regarding the delayed payment of a $547 million loan from the International Monetary Fund, which had said it would observe the "current political developments" before deciding whether or not to approve the payment.
In 10 days Romania plans to commemorate the 10th anniversary of the bloody coup of 1989 which toppled Nicolae Ceausescu. He and his wife, Elena, were executed by firing squad in front of millions of television viewers.
But the new Romania failed to keep up with the progress of its neighbours.
President Constantinescu spent much of yesterday in talks with the largest ruling party, the centre-right Peasants' Party, which is led by Mr Vasile, as well as with other coalition parties and the opposition.