Chilean President Michelle Bachelet has asked all her ministers to resign and says she will choose a new cabinet in the coming days.
In an interview with broadcaster Canal 13, Ms Bachelet said changes were needed to promote reforms.
Ms Bachelet's approval ratings have recently slumped amid a series of political scandals.
In February her son resigned as head of a government charity over allegations of influence-peddling.
The BBC's Gideon Long in Santiago says Ms Bachelet's dismissal of the entire cabinet is without precedent in recent Chilean history.
The move gives some indication of the gravity of the crisis she faces, he says.
'Important mistakes'
"A few hours ago I requested the resignation of all the ministers, and I will take 72 hours to decide who will stay and who will go," Ms Bachelet said on Wednesday evening.
"This is the time for a cabinet change."
Ms Bachelet's son, Sebastian Davalos, was accused by the opposition of using his influence to get a $10m (£6.5m) bank loan for his wife.
His wife's company used the money to buy plots of land in central Chile which her company then resold for profit.
Although Chile's national bank regulator cleared him of any wrongdoing, the issue has become a scandal.
Ms Bachelet always maintained she had not been aware of the deal but in a TV interview on Wednesday night she acknowledged she had made "important mistakes" in not returning from holiday or commenting on the case sooner.
Correspondents say trust in Chile's politicians and the business elite has also been eroded by a campaign-financing scandal involving right-wing politicians and a prominent financial company.
President Bachelet, a Socialist, is Chile's first woman president and ruled the country between 2006 and 2010 - enjoying approval ratings of over 80%.
After a period working for the United Nations in New York, she returned to the presidency for a second term last year but has seen her approval ratings slump to a record low of 31%.
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