Rauf Denktash, the leader of the self-declared Turkish Republic of Northern Cyprus, said he would meet with party leaders in coming days to seek ways to form a new government. If that fails, he said elections would be called with 60 days.
Prime Minister Mehmet Ali Talat will stay in office until a new government is formed, the report said.
Several members of parliament resigned from the two parties in the coalition following a failed referendum in April on a U.N. plan to reunite the Turkish and Greek Cypriots, reducing it to a minority government.
The coalition, which came to power earlier this year, is made up of Talat's Republican Turkish Party and the Democrat Party, led by Serdar Denktash. Talat supported the plan, but Denktash, did not.
The Turkish Republic of Northern Cyprus was declared in 1983, but is recognized only by Turkey.