French PM Manuel Valls has submitted the government?s resignation to President Francois Hollande and has been asked to form a new cabinet.
The government was badly shaken on Sunday by criticism over its handling of the economy by economy minister Arnaud Montebourg.
Moments after Mr Valls?s resignation Mr Hollande issued a statement.
He asked Mr Valls to set up a new cabinet ?consistent with the direction [Mr Hollande] has set for the country?.
The prime minister had accused Mr Montebourg of ?crossing a yellow line? after the economy minister had attacked austerity measures which he said were strangling France?s growth.
Mr Montebourg told a meeting of Socialists in eastern France that the time had come to put up a ?just and sane resistance? to the ?excessive obsessions of Germany?s conservatives?.