The Pacific nation has been plagued by instability since the 2022 election, with three prime ministers including the latest, Charlot Salwai.
However, Mr Salwai's coalition appeared to have lost majority support, with a motion of no confidence scheduled for this week.
Instead, he asked president Nikenike Vurobaravu for a fresh vote, who agreed.
"The council of ministers met and requested the president to dissolve parliament," Ralph Regenvanu, a Vanuatu MP, told ABC Pacific.
"He has acted very quickly, he has signed the instrument, it's been gazetted and basically parliament has been dissolved."
A picture of the president's mandate was circulated on social media on Monday night.
Vanuatu Prime Minister Charlot Salwai had been expected to face a no confidence vote in parliament. (Ben McKay/AAP PHOTOS)
Vanuatu's constitution states an election must be held 30 to 60 days following the dissolution of parliament, which would mean a poll between December 18 and January 17.
The last election was held in October 2022, with no party winning more than 16 per cent of the vote, producing a huge spread of almost 20 parties in the 52-seat chamber.
It is the second straight time the parliamentary term has been ended after just two years instead of the usual four.
Vanuatu MP Ralph Regenvanu said the public is dismayed by the political instability. (Mick Tsikas/AAP PHOTOS)
Just like the forthcoming election, the 2022 vote was also staged when the then prime minister Bob Loughman requested the dissolution of parliament to head of a no-confidence vote.
Mr Regenvanu, a former climate change minister, said he wanted ni-Vanuatu to choose stability in their elected representatives when they vote next.
"The public is very dismayed, frustrated by the ongoing inability of political leaders to maintain a stable government for obviously more than a year or so because that's all we've seen since the last snap election," he said.
"I'll be one that's standing again.
"We need more members of parliament who are going to think seriously about public funds, transparency, and the need for good leadership.
"We need more MPs concerned with good governance and accountability and I hope that's going to happen."
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