Iceland's three-party coalition government, in power since November 2021, collapsed on Sunday due to disagreements on policy issues, with new elections to be held in November, Prime Minister Bjarni Benediktsson announced.

Benediktsson, the head of the conservative Independence Party, told reporters tensions had mounted within the coalition in recent months on a range of issues, from foreign policy to asylum seekers and energy issues.

The coalition is made up of Independence Party, the Left-Green Movement and the centre-right Progressive Party.

The issues "were less discussed in the last election than need to be discussed now," Benediktsson said, stressing "how different the (Left-Green) Movement's vision for the future is, compared to what I want to stand for."

Benediktsson said he would meet Monday with Iceland's President Halla Tomasdottir to submit a proposal for the dissolution of parliament and parliamentary elections in November. (AFP)