Romania's ruling Social Democrats (PSD) lost a parliamentary majority on August 26 after a junior party pulled out following its leader's failure to become the governing coalition's presidential candidate.
ALDE, a liberal party, withdrew from the governing coalition two days after PSD picked its leader, Prime Minister Viorica Dancila, over ALDE chief Calin Popescu Tariceanu to challenge incumbent Klaus Iohannis in a presidential election scheduled for November.
Dancila said the PSD would continue to govern.
"The important thing is to not disappoint our voters who trusted us in 2016 [national] elections," she said on her Facebook page.
ALDE's withdrawal, which leaves the PSD 25 seats short of a parliamentary majority, forces Dancila to negotiate legislation on a bill-by-bill basis.
It also comes one year ahead of parliamentary polls and could raise the prospect of snap elections.
EU and U.S. authorities had strongly criticized the PSD-ALDE coalition for an assault on Romania's judiciary that they say threatened the rule of law, and for watering down anti-corruption legislation.
The collapse of the ruling coalition comes after voters handed a severe defeat to PSD and ALDE in elections to the European Parliament in May.
PSD's support almost halved, while ALDE was unable to reach the threshold to enter the EU assembly.
