The leader of one of Latvia's smaller parties, Mr Indulis Emsis, has been appointed prime minister of the country.
The government led by Mr Einars Repse resigned two weeks ago after losing its majority when a junior coalition partner quit over Mr Repse's sacking of the deputy prime minister.
Mr Emsis, a deputy leader of the small Union of Farmers and Greens, will probably try to form a broad majority coalition to ensure stability in the run-up to EU and NATO entry this spring.
President Vaira Vike-Freiberga said Mr Emsis's task was to form a coalition that would fight corruption and work "transparently". Ms Vike-Freiberga had urged a quick end to the crisis to avoid a lengthy political limbo in the former Soviet republic of 2.3 million people.
But coalition talks floundered because of continued squabbling among the leaders of the larger right-wing parties, giving Ms Vike-Freiberga no option but to pick a compromise candidate from one of the smaller parties in parliament.
Politicians expect Mr Emsis to ask all five right-wing parties to join a new majority coalition, but it looks unlikely that the parties of Mr Repse and his former deputy will work together again.
Latvians have lived through years of political turmoil since regaining independence from Soviet rule in 1991. The Baltic state has seen 10 cabinets fail to last a full term.