Viktor Yushchenko said he made the decision because infighting within his administration has begun to interfere with the goals that he set for his government after taking power following last year's Orange Revolution.
"Every day I witnessed more and more confrontations among these institutions at first, then serious conflicts on various issues, then backstage intrigues, which already started to affect the fundamentals of state policy," Yushchenko said.
Instead, Yushchenko has appointed Yuriy Yekhanurov, governor of the eastern Dnipropetrovsk Oblast, as acting prime minister and tasked him with forming a new cabinet. As head of the State Property Fund under former President Leonid Kuchma, Yekhanurov oversaw initial privatization in Ukraine in 1994-97.
Shortly after Yushchenko's announcement, Ukrainian Security Service (SBU) chief Oleksandr Turchinov announced his resignation. He gave no reason for the decision.
At the same time, Yushchenko has said that he wants dismissed Prime Minister Yuliya Tymoshenko to remain on his team. He also has said he wants former National Security and Defense Council (RNBO) Secretary Petro Poroshenko, who resigned from the government today, to stay.
Ihor Losev, a professor at Kyiv's Mohyla Academy, told RFE/RL that in the current situation Yushchenko has few alternatives. "It is evident that the government was formed hastily after the Orange Revolution," Losev said. "It included representatives of many different political trends and on the whole was not united. [The president] has to seriously reform the government and also look closely at people who surround him."
The president sacked the government amid allegations of high-level corruption that has led to the resignation of three top-level government officials. The latest of those resignations came today.
In resigning, Deputy Prime Minister for humanitarian issues Mykola Tomenko told a news conference he didn't want to bear responsibility for people who have created a corrupt system. "I don't want to bear collective responsibility for those people who over the past year have created a 'civilized' corruption scheme in Ukraine and in a unique way explain this corruption scheme as the position of the Majdan [referring to Kyiv's Independence Square, where the demonstrations that led to the Orange Revolution unfolded]," Tomenko said.
Shortly after Tomenko's resignation, RNBO head Poroshenko announced he had resigned so as not to obstruct an official investigation into corruption charges. Poroshenko was one of the high-level officials accused of corruption by Yushchenko's former chief of staff, Oleksandr Zinchenko, who resigned on 3 September.
Though Yushchenko's coalition government faces the biggest crisis of its seven-month existence, some observers are still optimistic. Volodymyr Horbach of the Kyiv-based Institute of Euro-Atlantic Cooperation told RFE/RL that eventually the crisis might push the administration to start reforms seriously.
He said the crisis is unlikely to tarnish Yushchenko's image very much because the revelations come from the administration itself, not from the opposition. "It is a part of the administration that discloses [the violations] not the opposition," Horbach said. "That's why people will respect [the administration] even more."
Others say the growing tensions in the administration are linked with the upcoming parliamentary elections in March as politicians jockey for public support.
Yushchenko, considered to be a pro-Western liberal, came to power pledging to make the fight against corruption one of his top priorities. He personally came in for strong criticism as a result of a reporter's recent investigation into his son's alleged life of luxury.
"RFE/RL Interviews Prime Minister Yuliya Tymoshenko"