After months of bitter acrimony, a Conservative-led censure motion was brought against Paul Martin’s Liberal government and upheld 171 votes to 133.
Mr Martin is expected to seek the dissolution of parliament shortly, and call a date for a general election.
Likely dates are thought to be January 13 or January 26, setting the scene for some frenzied campaigning over the Christmas holiday period.
Pollara pollster Michael Marzolini has predicted campaigns will be the most volatile seen in the country since 1988, when politics was dominated by a battle over free trade policy.
This time around, differences have stemmed from explosive recriminations about alleged corruption.
Conservative leader Stephen Harper has incensed the prime minister after alleging the Liberals were “a party named in a judicial inquiry.”
Mr Harper said the Liberals had been “found guilty of breaking every conceivable law in the province of Quebec with the help of organised crime.”
The Liberal Party has threatened to sue Conservative MPs, calling the allegations ‘false smears’.
Despite the damaging claims, a recent poll has support for Canada’s Liberal Party holding steady on 36 percent, unchanged from results taken two weeks ago.
However, the arch rival Conservatives are up three percentage points with 31 percent, according to the Pollara survey, while the small New Democratic Party has dropped four points to 16 percent.
In Quebec, the separatist Bloc Quebecois has polled strongly, holding an imposing lead of 60 percent to the Liberals’ 29 percent.
The country’s most populous province, Ontario, has shown a reduced margin between Liberals and Conservatives.
From a lead of 45 to 32 percent in the June 2004 election, the Liberals’ have now slipped to just a 42 to 38 percent difference over the Conservatives.
In British Columbia, Canada’s third most populous province, a tight race is shaping up with only three points separating all three national parties.
The New Democrats are leading there with 34 percent, followed by the Conservatives at 31 percent and the Liberals trailing on 30 percent.