The Government of Canada has been toppled in a vote of no-confidence following a corruption scandal involving the misuse of tens of millions of dollars of public funds.

Canada’s three opposition parties, which control a majority in Parliament, voted against the fragile minority Government of Paul Martin late last night, claiming his Liberal Party no longer has the moral authority to lead the nation.

With fresh elections for all 308 seats in the lower House of Commons now scheduled for January 23, the scene is set for a bitter campaign over the Christmas holidays. Martin and his Cabinet will continue to govern until the elections.

Opposition leaders last week called for the no-confidence vote after Martin rejected their demands to dissolve Parliament in January and hold early elections in February. The government made a flurry of spending announcements in Ottawa last week, trying to advance its agenda ahead of its demise.

"The vote in the House of Commons did not go our way," Martin said, as his government fell. "But the decision of the future of our government will be made by Canadians. They will judge us."

Stephen Harper, the Conservative Party leader, joined with the New Democratic and Bloc Quebecois parties to bring down the government. Recent polls have given the Liberals a slight lead over the Conservatives, with the New Democrats in third place.

The same surveys suggest the Bloc Quebecois would sweep the French-speaking province of Quebec, making a majority government unlikely no matter which party wins the most seats.

Harper would become Prime Minister if the Conservatives receive the most seats in Parliament. He favours tax cuts, and opposed Martin’s successful bill to legalise same-sex marriage throughout Canada.

Martin has had frosty relations with the White House, standing by the Liberal Party decision not to support the US invasion of Iraq. He also declined to join in Washington’s continental ballistic missile shield, infuriating the Bush administration; has been called weak on terrorism; and was vocal in his opposition of high US tariffs on Canadian lumber.

His push to legalise gay marriage also raised the hackles of US Republicans, but Martin is widely respected worldwide for Canada’s neutrality and open arms toward immigrants and minorities.

Canada’s Conservatives, by contrast, are seen as much more receptive to improving relations with Washington, though a majority of Canadians opposed the war in Iraq and the policies of President Bush.

"This has been an historic evening in this Parliament and this country," Harper said. "This is not just the end of a tired, directionless, scandal-plagued government. It’s the start of a bright new future for this country."

The opposition is banking on the public’s disgust with a corruption scandal involving the misuse of funds targeted for a national unity program in Quebec. An initial investigation absolved Martin of wrongdoing, but accused senior Liberal members of taking bribes and misspending tens of millions of dollars in public funds.

The Government ran into peril this month when it lost the support of the New Democratic Party, whose backing earlier this year helped Martin escape a previous no-confidence motion by a single vote. Jack Layton, the New Democrat leader, said that he had not received enough assurances that the Liberal Party would fight the increased use of private health care in Canada.

The prime minister had promised to call an election within 30 days of the release of a follow-up report on the corruption scandal on February 1, which would have meant elections in the first week of April - a time that suits Canadians better than the bitterly cold and busy holiday season. Although no formal agreement is in place, all the parties are likely to agree to a pause in the campaign around the Christmas and New Year holidays.

Grace Skogstad, a political science professor at the University of Toronto, said that Canadians will pay little attention to the election until after the New Year, so Martin’s opponents are unlikely to face a backlash for forcing a holiday campaign.

"It’s going to be those last three weeks after January 1 that are going to matter," said Ms Skogstad, who believes the Liberals will win another minority government. "For the Liberals, they are going to try to put all the focus on the economy, which is doing phenomenally well."

Unemployment in Canada is at a 30-year low and Canada runs a budget surplus.

"We will be entering this campaign on a balance sheet we can be proud of," Martin said. "Our economy is a strong one."

Andrew Stark, a political science professor at the University of Toronto, also maintained that the campaign would not be decided until the final days. Mr Stark, however, believed that the Conservatives will win a minority Government if Canadians view another Liberal and New Democrat coalition as being unaccountable with tax money.

The last time a Canadian political campaign coincided with the holiday season was in 1979, when Joe Clark’s minority Conservative Government was toppled just weeks before Christmas. That vote was delayed until February, however, when Pierre Trudeau and the Liberals took back Parliament.

The latest collapse comes 17 months after an election that turned a Liberal majority into a fragile minority on June 28, 2004.

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