Former Pakistani prime minister Nawaz Sharif has withdrawn his PML-N party - the country's second biggest - from the ruling coalition.
Mr Sharif has been in a dispute with the country's biggest party, the Pakistan People's Party, or PPP, over the reinstatement of judges sacked by former president Pervez Musharraf.
The two sides also disagree over who should be the next president.
The move throws Pakistan into further turmoil at a time of economic gloom and growing threats from militants.
Mr Sharif told journalists in Islamabad that the PPP - led by Benazir Bhutto's widower Asif Zardari - had broken promises, in particular over the matter of reinstating the judges. "When written documents are repeatedly flouted, trust cannot remain. We cannot find a ray of hope."
The PPP fears that if all the judges sacked by Mr Musharraf get their jobs back, they may invalidate an amnesty that paved the way for Mr Zardari and Ms Bhutto to return to the country last year.
That would leave Mr Zardari open to prosecution on long-standing corruption charges.
However, Mr Sharif said his party wanted to play a constructive role in opposition, indicating that he would not try to bring down the government for now.
Mr Sharif also said the PML-N was putting forward a non-partisan choice for the presidential election on 6 September - former Supreme Court chief justice Saeeduzzaman Siddiqui.
Mr Sharif and Mr Zardari had agreed to reduce the powers of the presidency in a country where the president has in the past dismissed democratically elected governments.
Mr Sharif says that as long as the presidency remains a powerful post, a non-partisan candidate acceptable to everyone, rather than Mr Zardari, should have been agreed on.
The PPP can rely on other parties in the coalition, so the government will not fall. However, the PPP may find Mr Sharif to be an uncomfortably powerful figure to have in opposition at a time when the country lacks a sense of political direction.
Mr Zardari and Mr Sharif worked together to threaten Mr Musharraf with impeachment, which led to his resignation last week.