Malcolm Turnbull's one-seat majority is under threat after the High Court ruled Deputy Prime Minister Barnaby Joyce ineligible to sit in parliament.
Also disqualified were cabinet minister Fiona Nash, former Greens senators Scott Ludlam and Larissa Waters and One Nation senator Malcolm Roberts.
Former cabinet minister Matt Canavan and crossbencher Nick Xenophon were found not to be disqualified.
Section 44 of Australia's constitution bans anyone holding dual citizenship from sitting in parliament, in a section aimed at ensuring MPs do not hold split allegiances.
Mr Joyce told reporters he expected a December 2 by-election in his NSW seat of New England and was not surprised by the court result, which he respected.
"In my gut I thought this is the way it was going to go," he said.
The prime minister has consistently expressed a view the court would support the government's argument his ministers were validly elected.
Labor deputy leader Tanya Plibersek seized on the decision, saying the prime minister had been "reckless" in allowing Mr Joyce and Senator Nash to retain their cabinet posts while the court decided their fate.
"We now have a minority government with a hung parliament because Barnaby Joyce broke the law," she told reporters in Sydney.
Labor also has advice that decisions made by the two ministers and their colleague Senator Canavan since October 2016 could be challenged in court under section 64 of the constitution.
The section provides that "no minister of state shall hold office for a longer period than three months unless he is or or becomes a senator or member of the House of Representatives".
With Mr Turnbull due to head to Israel on Friday, it is expected Foreign Minister Julie Bishop will be acting prime minister.
Senator Roberts will now run as a candidate for the Queensland seat of Ipswich at the state election.
Senator Xenophon plans to quit the federal parliament in any case, to lead a team in the South Australian state election in March 2018
"The irony of the decision is not lost on me," he told reporters in Canberra.
Independent Bob Katter was quick to note his new status following the decision.
"Just remember I'm one of the six most powerful people in Australia at the moment," he told reporters.
The government will need the vote of at least one crossbencher to retain the confidence of parliament and pass legislation through the lower house.
Independent Cathy McGowan has indicated she will support the government against any vote of no-confidence and for supply.
