Thailand's Prime Minister Yingluck Shinawatra says she will dissolve parliament and call an election, after weeks of protests in the capital, Bangkok.
The move followed the resignation of all opposition MPs from parliament on Sunday, and a planned march on Government House on Monday.
Ms Yingluck won elections in 2011. However, protesters allege that her government is controlled by her brother, ousted leader Thaksin Shinawatra, and have vowed to continue the demonstrations.
The announcement came as Ms Yingluck addressed the nation on television, the BBC reports.
No date was given for the polls, but Ms Yingluck said they would be held "as soon as possible". The governing party is calling on the opposition Democratic Party to participate.
In the 2011 election, Ms Yingluck's Pheu Thai party won a majority, with 265 seats to the Democrat Party's 159 seats.
Pheu Thai draws considerable support from mainly poor and rural areas of Thailand, and would be seen as well-placed to win an election.
Under Thailand's electoral regulations polls must be held within two months of parliament being dissolved.
Many protesters say they want real change rather than a dissolution of parliament.
The kingdom has been rocked by several episodes of political bloodshed since Thaksin Shinawatra was ousted by royalist generals in a coup seven years ago, AFP reports.
Ms Yingluck's government has been shaken by more than a month of rolling rallies by demonstrators - sometimes numbering in their tens of thousands - who want to suspend the country's democracy in favour of an unelected "People's Council".
The opposition Democrat Party said on Sunday that its 153 MPs were resigning from the 500-seat lower house - a move that does not prevent Ms Yingluck's Puea Thai party from passing new laws, but which leaves parliament facing questions about its legitimacy.
Protest leaders have said that they would not be satisfied with new elections, but the opposition Democrats hinted that it might take part in any new polls, even though they have not won an elected majority in about 20 years.