Delegates from Hungary's junior coalition party the Alliance of Free Democrats (SZDSZ) on Sunday rubber-stamped a decision to withdraw from government, condemning the senior Hungarian Socialist Party to struggle on without a parliamentary majority, the dpa reported.
Some 434 out of 542 delegates approved the move to leave the coalition on April 30.
The party's leader Janos Koka first announced that the SZDSZ would abandon its long-term partner at the end of March following the Socialists' decision to backtrack on economic reforms aimed at cutting the nation's budget deficit and eventually adopting the euro.
Prime Minister Ferenc Gyurcsany abandoned further reforms after losing a referendum on healthcare charges and tutition fees, a defeat that was the last straw for a party struggling with appalling popularity ratings.
Despite the collapse of the coalition, early elections are considered unlikely given the extreme unpopularity of the SZDSZ and the Socialists, and Koka emphasized that he did not want to create such a situation.
However, analysts say that the economic reforms, which cut the deficit to 5.5 per cent of Gross Domestic Product (GDP) in 2007 from 9.2 per cent the previous, are now dead in the water, with the government lacking both the will and the clout to push through further reforms deemed necessary by observers.
Gyurcsany has vowed to stick to the target of cutting the deficit to 3.2 per cent by 2009, but with elections coming up in 2010 many fear the government will try to spend its way out of its popularity crisis.
The reforms sent inflation soaring, slashed economic growth and sent the Socialists' poll ratings tumbling, with some polls putting it as low as 11 per cent.