Moldova's pro-Russian President Igor Dodon has been stripped of his duties, escalating a political crisis stemming from inconclusive general elections.
The move came after his party agreed a coalition cabinet with a pro-European Union block, welcomed by the EU.
Outgoing PM Pavel Filip's rival party challenged that agreement, and the Constitutional Court backed Mr Filip, appointing him as interim president.
Mr Filip then announced the dissolution of parliament and new elections.
But parliament refused to accept his order and said the country's state institutions had been seized. Mr Filip's Democratic Party is led by Moldova's richest man, Vladimir Plahotniuc.
The Council of Europe (CoE) - Europe's top human rights watchdog - criticised Moldova's Constitutional Court and said it was "extremely concerned" about the situation.
"Recent decisions of the Constitutional Court are difficult to understand and seem to be arbitrary in the light of the text of the Constitution and of international rule of law standards," said CoE Secretary General Thorbjoern Jagland on Sunday.
There are now fears that the prolonged political crisis could lead to violent clashes on the streets.
Moldova, a former Soviet republic, lies between the EU member state Romania and Ukraine and is one of Europe's poorest countries.
What's happening in Moldova?
Elections in Moldova in February resulted in stalemate, with no clear winner emerging between rival pro-EU and pro-Russian parties.
On Sunday, the Constitutional Court in the capital Chisinau relieved Mr Dodon of his duties because of his refusal to dissolve parliament.
This came a day after the pro-EU Acum political bloc and Mr Dodon's Socialists struck an unlikely deal and formed a compromise government.
In parliament, lawmakers also declared that Moldova's state and legal institutions "have been seized" by influential oligarchs, calling for the resignation of several top officials.
But their opponents say the formation of the new government took place a day after a constitutional deadline for this expired - a claim both Acum and the Socialists dispute.
Mr Filip's Democratic Party later filed a legal challenge, backed by the Constitutional Court.
In response, Mr Dodon described this as desperate steps to usurp power.
"The European Union stands ready to work with the democratically legitimate government," a statement issued on Sunday said.
Is this political tug-of-war unusual?
No. In Moldova, a parliamentary republic, the rival political camps frequently clash with one another.
Therefore the country - where the electorate is split between EU- and Russia-sympathisers - has witnessed several such crises in recent years.
They usually end up in holding snap elections, but results are often inconclusive.