The Government Council decided “to call on the CENIT (election commission) to determine an election calendar”, it announced in a statement, opening the way for a new vote date.
An electoral court on Tuesday declared a force majeure had compromised organisation for the July 24 presidential and parliamentary polls.
It found the suspension of donor funds and international rejection of three controversial presidential candidates made it unlikely the Indian Ocean island would be ready by that date.
Interim leaderAndry Rajoelina, 38, who seized power with military backing in 2009, had on Monday asked for a one-month suspension of the vote.
He refused to resign from his position on the two-month deadline ahead of elections as is required.
The African Union meanwhile has refused to recognise his candidacy, along with those of his rival’s wife Lalao Ravalomanana and of former president Didier Ratsiraka.
The UN chief Ban Ki-moon has called on all three candidates to withdraw from the race.
Madagascar has been in political limbo since Rajoelina, a youthful former disc jockey and mayor of the capital Antananarivo, seized power from former presidentMarc Ravalomananain 2009.
According to an internationally brokered roadmap aimed at steering the nation back to constitutional rule, neither politician would take part in new elections.
But when Ravalomanana’s businesswoman wife Lalao announced she would run Rajoelina declared his candidacy as well.