Reykjavik - The president of Iceland Tuesday asked the Social Democrats to try to form an interim government after the collapse of the ruling coalition.

The leader of the Social Democratic Alliance, Foreign Minister Ingibjorg Solrun Gisladottir, told reporters she hoped the minority government would be in place by the weekend.

The president wanted to include the Left-Green Movement, and with support from the Progressive Party the interim government would garner 34 seats in the 63-seat legislature.

Gisladottir, 54, has undergone treatment for cancer and may opt to extend her leave of absence leaving Social Affairs Minister Johanna Sigurdardottir of the Social Democrats as a likely interim premier until new elections are held. Sigurdardottir, 66, has scored high in approval ratings.

The political establishment's credibility has suffered in the wake of the financial crisis that has impacted the North Atlantic nation of some 320,000 people.

Before she was elected to parliament in 1978, Sigurdadottir worked as an air stewardess and an office worker. Her spouse is author Jonina Leosdottir. The couple have three adult children.

The Social Democrats in 2007 formed a grand coalition with outgoing Prime Minister Geir Haarde's conservative Independence Party. The coalition was dissolved Monday.

Haarde on Friday said his party recommended early elections on May 9, two years before schedule, but protesters that have staged daily protests since last week have demanded elections even sooner.

The economy is facing severe contraction and unemployment is due to rise sharply.

Interest rates are at 18 per cent and the country recently secured a 2.1-billion-dollar bridging loan from the International Monetary Fund (IMF).

Mark Flanagan, mission chief for Iceland at the IMF, said in a statement after Haarde's resignation that "an IMF programme supports good policies, not particular political parties or coalitions."

"As long as appropriate policies are in place in Iceland, such support can continue. A mission will visit Iceland in mid-February to conduct the next review under the programme," he added.

Haarde, 57, last week said he was suffering from cancer and was to step down as leader of the Independence Party at the party conference in March. (dpa)