The vote could see the far-right Freedom Party (FPOe), whose candidate narrowly failed to be elected president in December, enter government.
The coalition between Chancellor Christian Kern's Social Democrats (SPOe) and the People's Party (OeVP) was meant to govern until 2018.
But after months of bickering, the centre-right OeVP on Sunday appointed a new chief, Sebastian Kurz, who called for early elections.
The anti-immigration FPOe, like other populist parties in Europe, has seen its support rise on the back of concerns about immigration, terrorism and falling living standards.
And like elsewhere, Austria's two main parties, which have governed the EU country since 1945, have seen their support slide as they fail to connect with voters.
The FPOe, led by social media-savvy Heinz-Christian Strache, 47, is running neck-and-neck with the SPOe on around 30 percent in opinion polls.
The OeVP is lagging behind in the low 20s. However, surveys suggest that Kurz, who is only 30, could revive his party's fortunes and even make it the most popular force.
Austria's parties will likely on Wednesday present a motion for setting the election date, the Austria Press Agency reported said. It was unclear when this will pass, however.