Bangladesh's Islamist-allied government was due to hand power to a temporary administration on Friday or Saturday amid defections by lawmakers and fears of violence ahead of January general elections.
Prime Minister Khaleda Zia was to address the nation on television late on Friday to mark the end of her government's five-year term in the politically-polarised nation.
Plans for her speech came as 13 key politicians belonging to the Bangladesh Nationalist Party (BNP) which heads the four-party ruling coalition defected to a new political entity.
The new group, the Liberal Democratic Party, aims to break a nearly two- decade stranglehold on power by the BNP and the main opposition Awami League.
"The present BNP is a corrupt party that has cheated the whole country and moved away from the goal its founders set by becoming an Islamic fundamentalist party," the new party's joint secretary general, Firoz M Hasan, said.
Party founders blame the rise of religion extremism in the impoverished, mostly Muslim nation of 144 million people on the BNP.
It says it turned a blind eye to militants because its coalition government included two Islamic parties.
A wave of deadly attacks that started in August 2005 were carried out by the banned Jamayetul Mujahideen Bangladesh group as part of a campaign to impose strict Islamic law. Its top leaders were sentenced to death this year.
The interim administration would take over from the government Friday or Saturday, state-run BSS news agency quoted BNP secretary general Abdul Mannan Bhuiyan as saying.
The creation of the party headed by former president Badruddoza Chowdhury and Oli Ahmed, a former BNP minister, fuelled clashes late Thursday between BNP and Awami League supporters and led to arson attacks on the homes of three defectors.
Hasan said party chiefs would approach the Awami League to discuss an alliance.
Chowdhury's 2004 attempt to launch a "third way" in Bangladesh politics ended in mob violence.
Health Minister Khandaker Mosharraf on Friday dismissed the new party, saying deserters had never managed to establish a powerful political force, although analysts welcomed the development.
"Our two main parties have some basic drawbacks such as nepotism and cronyism, failing to meet the aspirations of the people and being so preoccupied with rivalry they do not even speak to each other," said Dhaka University political science professor Ataur Rahman.
The Awami League, meanwhile, said it would "paralyse" the country with protests starting on Saturday over the government's failure to bow to demands to name someone it considers impartial to head the caretaker government.
The Awami League told its supporters last week to make hundreds of thousands of poles and oars, a reference to the party's boat emblem, in readiness for street demonstrations.
On Friday, Dhaka police banned the use of sticks at any public gatherings.
The party accuses the ex-BNP official appointed as the head of the caretaker government of being pro-government and vows to boycott January's election unless the government agrees to its demands.
The caretaker government system aims to ensure the ruling party cannot dispense favors during the election campaign.
In addition to objecting to the government's decision to appoint former Supreme Court justice KM Hasan as head of the caretaker government, the Awami League and its 13 leftist allies want the head of the Election Commission MA Aziz replaced. It says both men are partisan.
Talks to resolve the impasse collapsed Monday.
After the government's tenure expires at midnight local time on Friday, it has 15 days to swear in the head of the interim administration.