The Turkish Government has been brought to the point of collapse, with two senior members offering their resignations.

First the highly-respected Foreign Minister, Ismail Cem, stood down on Thursday morning.

It is about time Turkey had a proper democratically elected party and let the people think for once.

Hasan, London

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Economy Minister Kemal Dervis - the architect of his country's economic recovery - also submitted his resignation but later withdrew it at the request of Prime Minister Bulent Ecevit and President Ahmet Necdet Sezer.

The US Treasury says it is closely monitoring events in Turkey - a key regional ally.

"We encourage the government of Turkey to continue implementation of its economic reform package and we anticipate that it will," a spokesman said.

Correspondents say the crisis could have repercussions for Turkey's bid for European Union membership and economic reforms.

Pressure

The resignations are seen as highly damaging to the authority of Mr Ecevit, who is increasingly isolated and ailing.

In total eight ministers have now walked out since the start of this week. More than 35 MPs have also quit Mr Ecevit's Democratic Left Party (DSP) in protest at his refusal to step down.

The prime minister tried to stage a fight back on Thursday, calling on party defectors to return and saying they had "fallen into a trap".

Kemal Dervis was not expected to resign just yet

"I call on these friends to unite again under the wings of the white dove," he said in a written statement, referring to his party's symbol.

But the BBC's Jonny Dymond, in Istanbul, says there is now enormous pressure on Mr Ecevit to resign.

There has been speculation in the press that Mr Cem and Mr Dervis are planning to set up a new political movement to challenge the DSP - which Mr Ecevit set up more than 20 years ago.

The two men met former Deputy Prime Minister Husamettin Ozkan, who began the wave of resignations, at Mr Cem's residence in Ankara late on Wednesday evening.

But correspondents say Mr Dervis's offer to resign came as more of a surprise, as he was expected to remain to ensure economic reforms stayed on track.

Mr Cem promised to give his reasons in a news conference on Friday.

Markets upbeat

Financial markets reacted positively to Mr Cem's departure.

Mr Cem is one of Turkey's most respected politicians

The markets are said to be cheered by the prospect of the "troika" forming a new centrist party, although there is no guarantee that any new movement would be accepted by the Turkish people.

Mr Cem is credited with helping thaw traditionally hostile relations with Greece in 1999.

Mr Dervis, a former World Bank vice president, is seen as the architect of the country's economic recovery programme.

The 77-year-old prime minister, whose ailing health has brought the government to near paralysis, insists he is the only person who can hold together the country's shaky three-party coalition.

He has repeatedly ruled out standing down.

Suspicions confirmed

Mr Ecevit is also facing pressure from the coalition partners who want early elections.

Both the far-right Nationalist Action Party (MHP) and the pro-business Motherland Party have made it clear they would like polls brought forward from the scheduled 2004 date - possibly to as early as September this year.

At this stage, it remains very unclear what kind of government a snap poll would produce.

Current opinion polls suggest that, were elections held now, the principal winner would be the pro-Islamic Justice and Development Party, but analysts say they could be misleading.

If the party were to win, it would almost certainly upset the army-led secularist elite of the mainly Muslim country and spark huge instability.

As the only Muslim country to belong to Nato, Turkey's political and economic stability are important to a variety of US interests abroad - including the Middle East, Afghanistan and Iraq.