Greek Prime Minister George Papandreou says he will form a new government Thursday and immediately ask for a vote of confidence in parliament, after coalition talks with the opposition fell apart.
Papandreou made his announcement on television Wednesday following a day of violent protests against plans for more spending cuts and tax hikes.
The prime minister did not specify exactly how he will reshuffle his Cabinet. But he said he plans to continue along the same road, calling it his duty.
While thousands of Greeks marched in Athens and Thessaloniki, the prime minister and opposition conservatives failed to agree on a new coalition government.
Papandreou said a consensus on his economic plans is needed for Greece to get the next vital installment of a $160 billion loan from the European Union and International Monetary Fund.
But many in the opposition and some in his own Socialist Party oppose his package of billions of dollars in spending cuts along with higher taxes and selling off many state-own assets.
Ordinary Greeks are also livid that they are being asked to make more sacrifices.
Wednesday's protest in Athens' Syntagma Square turned violent when riot police fired tear gas at thousands of demonstrators who threw stones and fire bombs. At least 40 people were injured. Some protesters tried to form a human chain around parliament to prevent debate on the austerity program. Police set up barricades to allow lawmakers to enter the building. At least 16 people were arrested.
Major labor unions also staged a general strike Wednesday, crippling Greece's public transit, media and state-run hospitals.
Some information for this report was provided by AP, AFP and Reuters.