The ruling Romanian coalition is on the verge of collapse after a junior party announced it had withdrawn support for the government.
The reformist USR-PLUS party has piled pressure on Romania's Prime Minister Florin Cîțu after he surprisingly dismissed his justice minister.
On Wednesday evening, Cîțu asked the Romanian President to remove minister Stelian Ion -- a member of USR-PLUS.
The PM had blamed Ion for blocking an investment programme for local Romanian governments worth up to 50 billion lei (€10 billion).
Cîțu said the scheme was intended to upgrade dilapidated infrastructure in one of the EU's poorest member states.
But opponents say the investment project was an attempt to buy the political support of "local barons" ahead of a party leadership campaign.
USR-PLUS said they were calling for the Prime Minister to resign, after the decision to dismiss Ion was endorsed by Romanian President Klaus on Thursday.
Blocking the investment plan was "blackmail", says PM
USR-PLUS described the dismissal as "abusive and groundless" and said it had begun to gather signatures for a motion of censure against the government if talks fail to produce a new Prime Minister.
In a statement, the party said that it would never support the regional development plan, which they claim would allow wealthy individuals to access easy financing without the checks of EU-funded projects.
Several NGOs have also stated that similar local funding programmes have previously resulted in wasted money.
"USR-PLUS supports the real development of local communities through transparent programmes and investments that make the lives of Romanians better," the party said on Facebook.
But Prime Minister Cîțu told reporters the decision to block the investment projected amounted to "blackmail".
"I will not accept ministers in the Romanian Government who oppose the modernisation of Romania," Cîțu said after an aborted executive meeting that was boycotted by the seven USR-PLUS ministers.
Analysts say that next month's Liberal party leadership election -- where Florin Cîțu is hoping to unseat former prime minister Ludovic Orban as party chief-- depends on support from powerful mayors across Romania.
The Magyar minority party (UDMR), which is the third-largest party in the coalition, has reiterated its support for the head of government.
But the ruling coalition would lose its absolute majority of 56% if the reformist USR-PLUS party were to leave.
Not the first time a minister has been dismissed without warning
Florin Cîțu was appointed to head the centre-right Romanian government after December's parliamentary elections.
The PM has previously plunged the coalition into crisis in April when he dismissed the health minister on charges of mismanagement of the pandemic. Cîțu's Liberal party then stated that it would not take any more decisions without consulting with its coalition partners.
Leaders of USR PLUS have also spoken in the past about supporting a no-confidence vote against the government.
Although their departure from the coalition would unlikely lead to early elections, the split would make it harder for Romania's government to reduce budget deficits and fight the COVID-19 pandemic.
The decision to dismiss the justice minister could also hamper attempts to appoint top prosecutors to fight organised crime and corruption in Romania.
"Prime Minister Florin Cîțu shows once again tonight that he has no respect for the law, for the Constitution," Ion said in a statement.
Meanwhile, Romania's opposition Social Democratic Party also tabled a motion of censure against the government on Thursday over rising energy prices.
The motion would be successful if the 80 USR-PLUS lawmakers join the opposition's votes.