Latvia's president said Wednesday authorities have lost touch with voters in the Baltic state, after demonstrators fought street battles with police in the capital city Riga.
It is the latest eruption of anger in economically troubled European nations, following riots in Greece and protests in Iceland and Russia.
"The government and parliament have lost their links with their electors," Latvian president Valdis Zatlers said.
Discontent has been brewing since the country slid into recession and the government had to seek a $10 billion rescue from the International Monetary Fund and European Union.
The economy is expected to shrink almost 5 percent this year after the credit crunch stopped a consumer boom.
It came on top of long-running allegations by government critics of arrogance and top-level corruption.
Zatlers said he would use his constitutional powers to dissolve parliament if deputies did not approve by March 31 an amendment to the basic law to allow people to seek early elections via a referendum.
The government must also urge new faces in the cabinet of the four-party ruling coalition, or even its expansion to include opposition parties, he added.
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