The move may clear the way for early elections in the Netherlands, possibly as soon as this summer, the government said.
The resignation came after the far-right party withdrew from talks about an austerity package worth €14.2 billion, the equivalent of $18.6 billion, according to a news report reprinted on a parliamentary website.
Lawmakers are scheduled to meet Tuesday to decide how to go forward.
Queen Beatrix asked Rutte and his ministers to stay in their positions until new elections.
Rutte's government had depended on the support of Geert Wilders' Party for Freedom, which came in third in parliamentary elections two years ago.
No party won enough seats to govern alone in 2010, so Rutte cobbled together a coalition with another center-right party.
But even that alliance did not command a majority in parliament, so they relied on the support of Wilders' anti-Muslim party.
The Party for Freedom did not get control of any government ministries, but the coalition agreement included elements it pushed for, such as a burqa ban.
No ban has been put in place.
Wilders' Party for Freedom defied predictions by taking 24 seats in parliament in June 2010, more than doubling the number of seats it held before the vote.
Wilders himself has been in and out of court for years, accused of inciting hatred against Muslims with his controversial film "Fitna."
The movie, which he released online in March 2008 to international outcry, features disturbing images of terrorist acts superimposed over verses from the Quran in an apparent attempt to paint Islam as a threat to Western society.
source: http://edition.cnn.com/2012/04/23/world/europe/netherlands-politics/index.html?hpt=wo_c2
