The Knesset has voted to dissolve parliament, paving the way for elections.
The measure was passed unanimously by 84 votes to 0, with one abstention. The move will be finalised on Monday in second and third readings.
Knesset faction leaders agreed on March 17, 2015 as the date for the election.
Yesterday Prime Minister Benajmin Netanyahu hit out at his former Finance Minister, Yair Lapid, and Justice Minister Tzipi Livni, after firing them earlier in the day and calling for early elections.
In a televised address last night, Mr Netanyahu said that the government had become "impossible to lead".
In what appeared to be an early campaign speech, he blamed the collapse of the coalition on Ms Livni and Mr Lapid.
He also reiterated that he would remain tough on Iran, keep the pressure on the Palestinians to recognise the Jewish state, and push construction in all of Jerusalem. He indicated that Mr Lapid and Ms Livni had been soft on all three issues.
He added: "If you can, choose an appropriate candidate from one of the left-wing parties. Or you can choose a strong prime minister."
Last-ditch talks between the Prime Minister and Mr Lapid – leaders of two of the coalition parties, Likud and Yesh Atid - broke down late on Monday.
Mr Netanyahu imposed a list of demands on Mr Lapid, which the Finance Minister said were unacceptable.
The prime minister attacked Mr Lapid on Tuesday, saying: "I will no longer tolerate opposition from within the government.”
In a statement, Mr Lapid said: "Prime Minister Netanyahu has failed in his management of the country and in dealing with the needs of the Israeli public. The firing of ministers is an act of cowardice and loss of control."
Opposition parties welcomed the collapse of the coalition, and late on Monday the strictly-Orthodox Shas called for an election date to be set.
Elections are expected in March or April.