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The speaker of Ukrainian parliament Arseniy Yatsenyuk announces the termination of the democratic coalition in the Verkhovna Rada ( parliament ) during its session in Kyiv, Ukraine, Tuesday, Sept. 16, 2008. AP Ukraine's pro-Western coalition was dissolved on Tuesday, opening the way to tough talks on finding a viable alternative to govern the country.

If the talks fail, Ukraine faces its third election in as many years.

The "orange" coalition, made up of groups led by President Viktor Yushchenko and Prime Minister Yulia Tymoshenko, collapsed this month when the president's allies walked out.

Tymoshenko and Yushchenko stood side-by-side in the 2004 protests that swept the president to power but, with Tymoshenko twice serving as prime minister, they have bickered constantly.

Parliament chairman Arseniy Yatsenyuk proclaimed the coalition dead after 10 days of conciliation attempts.

"This has been long expected, but for me it is extremely sad," Yatsenyuk told the chamber. "I would not call this a political apocalypse, though it is true that it is another challenge of democracy. I hope we can overcome it."

The coalition's demise leaves unfulfilled the revolution's ideals of moving Ukraine, a former Soviet republic, out of the shadow of giant neighbour Russia and closer to the West, with four European Union states on its Western border.

Experts saw little cause for optimism in 30 days now set aside for talks to restore it or find a new coalition able to assemble a majority in parliament.

With all politicians focusing on their chances in a presidential election due by 2010, both the president and prime minister have remained entrenched in their positions.

Tymoshenko vowed to keep on governing.

"Let me assure you that the government is going to work for a long time and successfully too, regardless of these storms," she told a public presentation of the 2009 budget. "They are no more than a storm in a teacup."

The hryvnia currency fell to 4.84 to the dollar from 4.78, trading on the small stock exchange was suspended due to a fall in the index and the cost of insuring against Ukraine defaulting on debt rose to 580-600 basis points from 570 on Monday.

But market players said the reaction was in line with all emerging markets, squeezed by investors digesting news of the collapse of U.S. bank Lehman Brothers and plunging sentiment on Russia following its war with Georgia.

BROAD COALITION

A leader of the president's Our Ukraine party said the way was now free for Tymoshenko to join opposition leader Viktor Yanukovich, the main adversary of "orange" forces in 2004.

Friendlier to Russia, Yanukovich was initially declared the winner of the 2004 presidential election, but lost a rerun when the result was overturned in the courts.

Yanukovich, whose Regions Party has the most seats in parliament, renewed calls for a broad coalition to unite a country long divided into a nationalist west and centre and the Russian-speaking, industrial east and south, his power base.

"No single party is in a position to overcome this crisis on its own. Any configuration leaving out the country's biggest political forces is doomed to fail," he told deputies.

All major parties stand to gain little from a new poll.

Eight months into Tymoshenko's second term, the country is gripped by annual inflation of 26 percent. Poor market prospects have prompted forecasts of a leap in the foreign trade deficit to $25.5 billion next year from $15.4 billion in 2008.

Relations with Russia have deteriorated sharply, largely over the president's drive to win NATO membership for the country of about 47 million people and over his denunciation of Russia's military intervention in Georgia last month.

Our Ukraine quit after denouncing a vote to cut presidential powers in which Tymoshenko joined Yanukovich and his party.

Tymoshenko's group is the second largest in the 450-seat chamber after Yanukovich's Regions Party and says it is up to the president to preserve the legacy of the 2004 Revolution.

Two polls published in recent days show Tymoshenko's bloc and Yanukovich's Regions Party vying for the lead with about 20 percent each, far ahead of Our Ukraine.