Scholz harshly criticised his former finance minister, saying he had “betrayed my confidence” and accusing him of putting the interests of his party base over those of the country.
He added that Germany needed to show it could be relied upon by other countries, particularly following the election of Donald Trump.
The chancellor leads the centre-left Social Democrats, which formed a coalition with the environmentalist Greens and economically liberal FDP in 2021. The trio’s alliance was nicknamed the “traffic light” coalition for their party colours.
The traffic light coalition took office after 16 years of rule by Angela Merkel, of the conservative CDU.
The crisis inside the coalition plunged the government of Europe’s largest economy into chaos, hours after Trump’s election triggered deep uncertainty about the continent’s future economy and security.
Lindner reportedly favoured cutting taxes and weakening climate regulations in a dispute over strengthening Germany’s public finances, positions rejected by his coalition partners.
Economy Minister Robert Habeck of the Greens said the party would not quit the government and that its ministers would remain in office.
Scholz announced that a vote of confidence would be held in Germany’s parliament, the Bundestag, on 15 January. If MPs vote down the government, the country would fresh elections go to early elections within weeks, instead of the scheduled date in September.
The CDU is currently far ahead in the polls. Scholz’s Social Democrats and the far-right Alternative for Germany are tied for second.