The move to hold earlier elections comes after the ruling coalition appointed fisheries and agriculture minister Sigurdur Ingi Johannsson of the Progressive Party as new prime minister.
Prime Minister Sigmundur David Gunnlaugsson stepped aside after the so-called Panama Papers leak of documents showed his wife owned a firm with claims on the island's collapsed banks, sparking wide-spread protests.
The Pirate Party is leading in recent polls.
(Reporting by Ragnhildur Sigurdardottir via Stockholm newsroom)
