Greek socialist leader Evangelos Venizelos says the country will hold fresh elections after several attempts to form a coalition government failed.
President Carolos Papoulias meanwhile called a meeting for May 16 with all party leaders to put in place a caretaker government to run the country until the ballot, expected next month.
The moves come after final round of talks between party leaders on the creation of a new government broke up earlier in the day without a deal.
No party won a conclusive majority in elections on May 6, and the parties have not been able to agree on a coalition because of differences over austerity measures and financial bailout deal reached with the European Union and the International Monetary Fund (IMF) to avoid default.
The uncertainty has shaken financial markets and fueled speculation Greece may leave the eurozone.
Based on reporting by AP, AFP, and Reuters