New Caledonia's budget minister Philippe Dunoyer says he will resign by today to take up his seat in the French National Assembly.
This means the government led by Philippe Germain will fall because the collegial government needs to be renewed in its entirety if a single member quits.
Mr Dunoyer cannot hold both offices under new French rules restricting the accumulation of powers.
A meeting of the caretaker administration is expected on Thursday to determine the size of the next government, which currently has 11 members.
Congress is then due to meet before the end of the month to elect a new government.
Mr Germain, who is an anti-independence politician, is seeking re-election as president but observers say new rifts triggered within the loyalist camp by this year's French elections may thwart his ambition.
New Caledonia's Budget Minister Philippe Dunoyer Photo: AFP